Nvidia slips below $5 trillion as 3 rivals close the gap

Nvidia's market cap slipped below $5 trillion on June 6, even as the chipmaker posted 85% revenue growth, narrowing its lead over Alphabet, Apple and Microsoft.

"Nvidia's growth narrative extends beyond traditional GPUs, with integrated AI systems positioning the company to capture a greater portion of AI infrastructure investment," Doug Nathman and his team at Trefis said.

Nvidia reported record revenue of $81.6 billion in its latest quarter, with data center revenue surging 92% to $75.2 billion. Alphabet's market cap has climbed 20% this year to about $4.5 trillion, while Apple and Microsoft remain within striking distance. Nvidia's price-to-earnings ratio stands at 32.1x, well below its three-year average of 56.1x, making it the cheapest among the five largest companies by forward earnings. The U.S. 10-year Treasury yield held near 4.35% during the session, while the dollar index edged lower, providing a mixed backdrop for growth stocks.

The narrowing valuation gap raises questions about whether Nvidia can sustain its premium as growth rates normalize. Wall Street projects revenue will rise 80% in the current fiscal year and nearly 40% in the next, with data center capital expenditure from AI hyperscalers expected to reach $1 trillion next year, according to Nvidia's management.

Alphabet has emerged as the strongest challenger, with its market value increasing 20% year to date compared with Nvidia's 12% gain. The Google parent's cloud business posted revenue of $20 billion in its latest quarter, up 63%, as customers access its Gemini large language model and AI services. Apple and Microsoft have also traded the top spot with Nvidia over the past year, reflecting how concentrated the $5 trillion-plus club has become.

Nvidia's growth trajectory remains steep by any historical measure. The company's data center revenue alone — $75.2 billion — exceeds the total market capitalization of most S&P 500 companies. Its Vera CPU series, announced as part of a broader push into central processing units, opens a new $200 billion total addressable market, with management already seeing a path to nearly $20 billion in CPU revenue this year. Sovereign AI revenue has increased threefold to exceed $30 billion in fiscal 2026, providing another demand source beyond the hyperscalers.

The key variable is valuation. If Nvidia's P/E multiple compresses further to 24.1x as growth decelerates, the stock would still reach about $390 per share, implying a market cap of $9.5 trillion, according to Trefis. That scenario assumes revenue reaches roughly $680 billion by fiscal 2029, representing about 47% annualized growth. Should growth hold up better than expected, that multiple compression could reverse, delivering even greater upside.

This article is for informational purposes only and does not constitute investment advice.