NVIDIA’s $1.3 Trillion Drop: Is the AI Giant Now a Buy?

The tech world has rarely seen such a dramatic reversal of fortune as that of NVIDIA (NVDA). Once the darling of the AI revolution, its market capitalization soared to a staggering $3.01 trillion in June 2024—making it the third-most valuable company in history. Today, just over a year later, its valuation has plummeted by over $1.3 trillion, with shares trading at roughly $95.34 as of April 21, 2025 (down from a peak of $135.58 in June 2024). The question now is: Has the sell-off gone too far? Or are there deeper cracks in NVIDIA’s AI empire?

The Market Cap Roller Coaster

NVIDIA’s valuation peaked in mid-2024 as investors bet big on its dominance in AI chips, gaming GPUs, and data-center infrastructure. But the subsequent decline has been relentless. By April 2025, its market cap had slumped to $2.36 trillion, a loss of nearly 40% from its all-time high. This drop has sparked debates among investors: Is this a buying opportunity, or a sign of waning dominance?

What’s Driving the Decline?

Several factors have contributed to the selloff:
1. Valuation Stretch: At its peak, NVIDIA’s price-to-sales (P/S) ratio hit 38.3x, far exceeding its peers. Texas Instruments (TXN) trades at 10.5x, and Intel (INTC) at 7.1x. Such a premium became unsustainable without proven long-term AI revenue streams.
2. Regulatory Headwinds: U.S. export restrictions on advanced AI chips in late 2024 and early 2025 spooked investors, raising concerns about growth in key markets like China.
3. Competitor Surge: AMD (AMD) and Intel have ramped up AI chip development, while cloud giants like Amazon (AMZN) and Google (GOOGL) invest in in-house alternatives.
4. Market Rotation: Investors have shifted focus to other sectors, such as generative AI software companies, sidelining hardware plays like NVIDIA.

The Bull Case: Why Now Could Be Different

Despite the challenges, NVIDIA’s fundamentals remain formidable:
- Revenue Growth: The company reported $60.9 billion in revenue for 2024, with data-center sales surging to $26.3 billion (up 122% year-over-year).
- AI Leadership: Its H100 and H800 GPUs still dominate cloud infrastructure, and partnerships with Microsoft (MSFT) and OpenAI solidify its position.
- Valuation Reset: While the P/S ratio has dropped to 20x (still high, but closer to peers), the P/E ratio has fallen to 42x, down from 72x at the peak.

Technical Analysis: A Bottom in Sight?

Technically, NVIDIA’s stock has shown signs of stabilization. After testing lows of $71.63 in early 2025 (per forecasts), shares rebounded to $95 by April. Key support levels lie around $85–$90, with resistance at $100 and $115. A sustained breakout above $115 could reignite momentum, but investors should watch for volume confirmation and a positive earnings surprise in Q1 2026.

Risks to Consider

• Regulatory Uncertainty: Ongoing U.S.-China tech tensions could limit NVIDIA’s sales in critical markets.
• Margin Pressure: Competitor pricing wars and software shifts (e.g., AI models running on CPUs) could erode GPU demand.
• Valuation Multiple Squeeze: If AI adoption slows, the stock’s high multiples may come under further pressure.

Conclusion: A Buy for the Long Run, But Proceed with Caution

NVIDIA’s drop from $3 trillion to $2.36 trillion represents both a risk and an opportunity. While its valuation is still elevated relative to peers, its $60 billion revenue base, 38% data-center growth, and unmatched AI ecosystem give it a fighting chance to regain investor confidence.

However, this is not a short-term bet. Investors must accept the possibility of further volatility and be prepared for a prolonged battle with competitors and regulators. For those with a 5–10 year horizon, NVIDIA’s role as the gatekeeper of AI infrastructure could justify today’s price—if its moat holds.

Final Take: NVIDIA is not a “buy the dip” stock—it’s a generational play. But at current levels, the odds of success tilt slightly in favor of long-term investors willing to endure the storm.