Nvidia's Market Cap Reaches $4 Trillion

Nvidia's Market Cap Reaches $4 Trillion

Nvidia, a leading semiconductor company, briefly surpassed a $4 trillion market capitalization on Wednesday, marking a historic milestone in the technology sector. This achievement was driven by a 280% increase in its share value over the past two years, fueled by the rapid growth of artificial intelligence (AI) technologies.

Shares closed at $162.88 on Wednesday, slightly below the intraday high of $164.42, resulting in a market cap of $3.97 trillion. Nvidia’s hardware and software, essential for generative AI programs like ChatGPT, have positioned the company as a major player in the AI industry, significantly influencing overall stock market returns.

Analyst Perspectives

Analysts from Morningstar predict that Nvidia will maintain its market dominance despite increasing competition from tech giants like Alphabet and Microsoft. While these companies may seek alternative solutions to reduce their reliance on Nvidia, analysts believe that Nvidia’s leadership in the AI sector will remain unchallenged.

Morningstar considers Nvidia fairly valued, with a price-to-fair-value ratio of 1.14, even after its unprecedented rally. Since its IPO in 1999, Nvidia has consistently outperformed the broader U.S. market, particularly over the last three years following the launch of ChatGPT in 2022.

Recent Performance and Challenges

Over the past two years, Nvidia has delivered returns exceeding 280%, surpassing market expectations. The company’s market cap reached $1 trillion in May 2023 and $3 trillion just over a year later in June 2024. However, Nvidia faced challenges in early 2025 when DeepSeek, a Chinese competitor, introduced AI technology with comparable performance at a lower cost, raising concerns about long-term market dynamics.

Additionally, a looming global trade war caused investors to shift away from riskier AI investments. Despite these challenges, Nvidia’s shares have rebounded, rising over 25% since the market’s low point on April 8, following a temporary pause in tariffs and renewed confidence in chip demand.

Nvidia surpassed Microsoft to become the world’s largest company earlier this summer, with Microsoft’s market cap near $3.8 trillion. Apple, which held the top position for most of the last decade, has fallen behind due to concerns about its AI progress, slower growth, declining iPhone sales, and regulatory pressures in Europe.

Impact on Market Returns

Nvidia’s growing market cap has made it a significant driver of overall market returns. With a 6.8% weight in the Morningstar US Large-Mid Index, Nvidia contributed 2.4 of the 11.4 percentage points gained by the index in the second quarter of 2025. Its impact was even more pronounced in the first and second quarters of 2024, contributing 2.3 and 1.7 points, respectively.

In the second quarter of 2024, Nvidia accounted for nearly half of the market gains, solidifying its role as a key player in the global technology landscape.