Nvidia has suffered one of its biggest market setbacks in years, with the chipmaker shedding around $1 trillion in market value since its shares peaked in mid-May.
While the company remains a dominant force in artificial intelligence hardware, investors have increasingly turned their attention to other semiconductor companies that are now delivering stronger stock market gains.
Stock Slides to Its Lowest Valuation in Years
The AI chip leader has seen its valuation fall to levels not seen since early 2019, before the explosion of generative artificial intelligence transformed Nvidia into one of the world’s most valuable companies.
Since reaching a record high on May 14, 2026, Nvidia’s stock has dropped roughly 16%, erasing approximately $1 trillion from its overall market capitalization.
The decline marks a sharp reversal after several years of extraordinary growth fueled by soaring demand for AI processors.
Nvidia Now Trades Below the Broader Market
Despite remaining one of the technology sector’s biggest names, Nvidia’s valuation has become surprisingly modest compared to the broader stock market.
According to Bloomberg data, the company is now trading at a forward price-to-earnings ratio of about 18.
That places it below both the S&P 500, which trades above 20 times forward earnings, and the Nasdaq 100, where the average multiple is close to 23.
The lower valuation means Nvidia is now considered cheaper than more than half of the companies listed in the S&P 500, a dramatic change for a stock that previously commanded one of Wall Street‘s highest premiums.
Business Fundamentals Remain Strong
Although the stock has weakened, Nvidia’s underlying business continues to perform well.
Analysts have continued raising their earnings expectations for the company, reflecting confidence in its long-term growth prospects.
At the same time, Nvidia has strengthened its already commanding position in the server graphics processing unit (GPU) market.
By the end of 2025, the company controlled roughly 97% of the server GPU market, up from about 95% a year earlier, underscoring its continued dominance in AI infrastructure.
Investors Rotate Into Other Semiconductor Winners
Rather than signaling concerns about Nvidia itself, the recent sell-off appears to reflect a broader shift in investor strategy.
Many investors are expanding their exposure across the semiconductor industry instead of concentrating heavily on one company.
Memory and storage chip manufacturers have attracted significant interest as demand for AI infrastructure continues to grow.
This rotation has benefited several of Nvidia’s competitors, particularly companies positioned to supply critical components used in artificial intelligence systems.
Micron, AMD and Intel Take Center Stage
Among the biggest beneficiaries has been Micron, whose shares have dramatically outperformed the rest of the semiconductor sector.
The company’s stock has surged an astonishing 229% in 2026 after climbing another 239% during 2025.
AMD and Intel have also delivered impressive double- and triple-digit gains, leaving Nvidia’s 5.6% advance this year trailing even the S&P 500’s 9.6% return.
The strong performance of these companies has helped reshape investor sentiment across the chip industry.
AI Boom Expands Beyond a Single Company
The broader semiconductor sector continues to benefit from the ongoing AI revolution, even as leadership within the industry evolves.
During the second quarter alone, Micron, Intel, and AMD collectively added around $2 trillion in market value as investors broadened their AI investments beyond Nvidia.
Micron’s rapid rise has been driven largely by soaring prices for high-bandwidth memory chips, a crucial component for AI computing.
Those higher prices helped lift the company’s third-quarter gross profit margin to 84.9%, a remarkable improvement from 39% during the same period a year earlier.
While Nvidia remains the dominant supplier of AI chips, recent market movements suggest investors are increasingly betting that the next phase of artificial intelligence growth will create winners across the entire semiconductor industry rather than concentrating gains in a single company.
