Nvidia's Market Cap Just Fell Below $5 Trillion. Here's Why It's a Buying Opportunity

Is Nvidia's (NVDA 1.42%) incredible run finally over? Since the company released its latest earnings report -- for the first quarter of its fiscal year 2027, ending April 26 -- on May 20, the stock has been trending south. Nvidia's market cap recently dipped below $5 trillion, after peaking at above $5.5 trillion earlier this year. However, despite the market's skepticism, there remain excellent reasons to invest in Nvidia, especially at current levels. Here's why the stock is a no-brainer buy on the dip.

Image source: The Motley Fool.

The bull case remains intact

Nvidia's bears will point to increased competition in the GPU (Graphics Processing Unit) market, including from companies such as Cerebras Systems (CBRS +7.76%), which recently went public. Others will highlight that the hyperscalers -- Nvidia's biggest customers -- are increasingly relying on internally developed custom artificial intelligence (AI) chips, which could decrease their exposure to Nvidia's hardware. Some of them are even exploring selling their AI chips to other data centers, a move that will pit them directly against Nvidia.

These are reasonable concerns. However, several factors make Nvidia's prospects attractive despite these potential obstacles. First, Nvidia still reigns supreme in the GPU space, with a 94% market share, according to some estimates. Whatever the exact number, nobody denies that Nvidia has a runaway lead. Competitors aren't just facing a hardware problem when trying to knock Nvidia off its pedestal. The company's wide moat stems from its sticky CUDA ecosystem, which makes it difficult for customers to switch to competitors. Even seasoned semiconductor leaders like Advanced Micro Devices (AMD 1.48%) have made little progress in capturing market share from Nvidia.

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NASDAQ: NVDA

Nvidia

Today's Change

(-1.42%) $-2.77

Current Price

$192.97

Key Data Points

Market Cap

$4.7T

Day's Range

$191.22 - $195.54

52wk Range

$151.49 - $236.54

Volume

4.8M

Avg Vol

161.6M

Gross Margin

74.15%

Dividend Yield

0.14%

Further, the company is launching a new platform, Vera Rubin (Rubin is the GPU, while Vera is a CPU, or Central Processing Unit), that is even better than its previous Blackwell architecture. The Rubin GPU is expected to offer significantly better performance and cost efficiency than Blackwell. That will help Nvidia mitigate the threat from custom AI chips, since one of their appeals is that they offer better price-to-performance for specific workloads than comparable GPUs.

There is plenty of evidence that the hyperscalers will continue buying from Nvidia and will increase AI infrastructure spending in the next few years, at the very least. Amazon's (AMZN +2.44%) CEO, Andy Jassy, has explicitly said the company will remain a customer of Nvidia for the foreseeable future.** Alphabet** (GOOG 2.15%) (GOOGL 1.73%) plans to significantly increase capex spending next year, and recently put its money where its mouth is with a massive $80 billion equity offering to help fund its AI-related ambitions.

Finally, Nvidia is tapping into a new opportunity with the Vera CPU, as the shift to agentic AI will bring about increasing demand for CPUs. Nvidia thinks this market could be worth $200 billion. Here's the bottom line: Nvidia's AI-related tailwind is far from over. And over the next five years, the company could once again generate above-average returns, especially for investors who buy its shares on the dip.