Nvidia (NVDA.US) fell 1.8% pre-market, with its market cap evaporating $1 trillion in less than two months, and its valuation dropping to the lowest since early 2019.

The situation in the Middle East has deteriorated sharply, with U.S. President Trump stating that the U.S.-Iran temporary ceasefire agreement has ended. Dow futures once fell more than 700 points, currently down 649 points or 1.2%; S&P 500 futures and Nasdaq futures are down 1% and 1.5% respectively. AI chip giant Nvidia (NVDA.US) is down 1.8% in pre-market trading, at $193.42. Nvidia's market cap has evaporated about $1 trillion in less than two months, with its stock price falling back to valuation levels seen before the AI boom erupted. Since hitting an all-time high on May 14, the stock has fallen 18.2%, as investors adjust AI trading strategies, dumping Nvidia in favor of other semiconductor manufacturers, especially memory market shares.

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According to Bloomberg-compiled data, the selloff has brought Nvidia's forward P/E ratio to 18 times, the lowest since early 2019. The former market leader is now cheaper than the S&P 500 (forward P/E over 20 times) and the tech-heavy Nasdaq 100 (nearly 23 times). Nvidia's valuation contraction is not due to deteriorating prospects; analysts have actually been raising earnings forecasts for the coming quarters. The sell-off reflects that the AI trade is shifting to other areas, such as memory and storage stocks like Micron (MU.US), and even Nvidia's competitors AMD (AMD.US) and Intel (INTC.US) have more than doubled or tripled this year.

After surging more than 11 times between late 2022 and 2025 due to surging GPU demand, Nvidia's stock is up only 5.6% this year, lagging the S&P 500's 9.6% gain and the Nasdaq 100's 16% gain. The Philadelphia Semiconductor Index has jumped 74% over the same period, on track for its best annual performance since 2003, led by Micron, which has benefited from surging prices of high-bandwidth memory chips. Nvidia is the third worst-performing stock among the 30 semiconductor-related stocks in the benchmark index.

Last month, Nvidia's correlation with the chip index fell to its lowest since 2014. Eric Clark, chief investment officer at Accuvest Global Advisors, said, "The stock ran very far, very fast over a period of time, and it was a very crowded trade. Then the market wanted to get exposure to other things, and Nvidia became a source of funding for other trades." (da/u) (U.S. stocks are real-time streaming quotes; OTC market stocks are excluded, data delayed by at least 15 minutes.)

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