Nvidia Drops Out of the $3tn Club as Shares Slide, Leaving Only Apple With That Valuation

Nvidia has lost its place in the exclusive $3 trillion market cap club, leaving Apple as the only publicly traded company still holding that valuation.

The decline comes as Nvidia’s stock tumbled in the wake of its latest earnings report, sparking renewed concerns over whether the chipmaker’s dominance in the AI industry is beginning to face real challenges.

After Nvidia’s shares dropped 8.5% on Thursday, the company saw its market capitalization shrink to $2.94 trillion, wiping out an estimated $273 billion in value in just one day. Although the stock rebounded slightly on Friday, gaining about 1%, it was not enough to restore Nvidia’s previous position above the $3 trillion mark.

This steep decline highlights that Nvidia is not yet free from the lingering effects of DeepSeek’s emergence, a development that has sent ripples through the semiconductor industry and significantly impacted Nvidia’s stock in recent months.

The growing influence of DeepSeek, an AI research and semiconductor company backed by China’s leading tech giants, has raised concerns over Nvidia’s long-term dominance in the AI chip sector.

DeepSeek, which made headlines late last year, has been aggressively developing high-performance AI chips that are being positioned as direct competitors to Nvidia’s GPUs. The company, reportedly supported by Alibaba, Tencent, and other Chinese investors, aims to create advanced AI processing units that bypass U.S. sanctions on semiconductor exports to China.

As a result, the emergence of DeepSeek has been viewed as a potential game-changer in the AI and semiconductor industries, as it introduces a powerful new competitor into a market that Nvidia has long dominated. Investors reacted swiftly when news of DeepSeek’s advancements began circulating in late 2024, leading to a brief tech stock sell-off that affected major U.S. chipmakers, including Nvidia and AMD.

For Nvidia, this was particularly alarming given that China accounts for a significant portion of its AI chip sales. The company has been struggling with export restrictions imposed by the U.S. government, limiting its ability to sell its most advanced GPUs to Chinese firms. DeepSeek’s rapid progress presents an additional challenge, as it reduces China’s dependence on Nvidia’s products altogether.

The fear that DeepSeek could capture a sizable market share in China has weighed heavily on Nvidia’s stock, contributing to its recent volatility. Analysts have pointed out that while Nvidia still leads in terms of AI chip performance, the geopolitical landscape and increasing competition from Chinese firms could threaten its long-term growth prospects.

Even before the DeepSeek threat materialized, Nvidia had been facing mounting concerns from investors over several key issues, including:

1. The potential for stricter U.S. export controls on AI chips, which could further limit Nvidia’s ability to sell to key international markets.
2. Growing fears that AI models are becoming more efficient, reducing the need for the most powerful GPUs that Nvidia specializes in producing.
3. Worries about a slowdown in AI infrastructure investment, particularly from large cloud service providers like Microsoft, Google, and Amazon, which account for a significant chunk of Nvidia’s revenue.

These concerns have led to increased profit-taking among investors, as many seek to lock in gains after Nvidia’s historic stock surge in 2023 and 2024. The latest earnings report, while strong, failed to fully ease worries about the company’s future growth trajectory.

Despite the stock decline, Nvidia’s latest earnings report was solid, with the company delivering results that exceeded analyst expectations.

Revenue for the most recent quarter came in at $39.33 billion, marking a 78% increase from the previous year. Nvidia’s data center revenue alone surged 93%, reaching nearly $36 billion, a reflection of the continued demand for its AI chips.

CEO Jensen Huang reassured investors that the company’s outlook remains strong, particularly as next-generation AI models require even more processing power. He explained that AI models are evolving to think and reason step by step, a process that demands significantly higher computational capabilities.

“The amount of computation necessary to do that reasoning process is 100 times more than what we used to do,” Huang told CNBC in an interview.

Additionally, Nvidia confirmed that production issues for its upcoming Blackwell chip have largely been resolved, setting the stage for a strong start to fiscal 2026. However, even with these reassurances, the stock continued to slide, underscoring the broader concerns hanging over the semiconductor industry.

Semiconductor Challenges and AMD’s Struggles

Nvidia’s struggles are not occurring in isolation. The broader semiconductor sector has been under pressure, with other major chipmakers also experiencing significant stock declines.

AMD, one of Nvidia’s biggest competitors, has been particularly hard hit. The company’s stock has dropped over 10% this week and is now down more than 13% since early February. The sell-off was triggered by a disappointing fourth-quarter earnings report, which showed that AMD’s data center revenue fell short of expectations.

The weaker-than-expected results have fueled speculation that AMD is struggling to compete with Nvidia in the AI chip market, further reinforcing Nvidia’s dominance in the sector. However, given the rapid developments in AI and the emergence of new competitors like DeepSeek, Nvidia’s position at the top is no longer as secure as it once was.

However, Nvidia’s stock is still worth five times more than it was two years ago, at the start of the generative AI boom.

While the short-term sell-off reflects concerns about competition, geopolitical risks, and slowing AI investment, many analysts believe that Nvidia remains well-positioned to capitalize on the continued expansion of AI technologies.

Still, the question remains: Can Nvidia quickly bounce back and reclaim its $3 trillion valuation, or is this the beginning of a more prolonged correction?