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Tech Corner: Nvidia Shares Exceed $4 Trillion in Market Cap!

By Daniel Morgan, Synovus Trust Senior Portfolio Manager
Synovus Trust Company, N.A.

Nvidia Corp (NASDAQ: NVDA) has achieved a historic milestone, becoming the first company to hit a $4 trillion market capitalization. Nvidia's rapid ascent has been fueled by its central role in powering the generative AI wave, with its graphics processing units (GPUs) becoming critical infrastructure for everything from chatbots to large language models (LLMs). Nvidia started out mainly making graphics chips for gaming but has become a leading company in AI technology. Its chips are now used to train AI and run data centers for big tech companies like Microsoft, Amazon, Meta and Alphabet, which together make up more than 40% of Nvidia's sales.

What does Nvidia's market cap milestone mean for the company and the AI trade? Nvidia hitting the $4 trillion market cap confirms, that despite all the doubters, the “AI Trade” is still intact! Numerous concerns by investors over the future of Nvidia — ranging from DeepSeek, Tariffs, declining CapEx from data center providers and Blackwell ramp hurdles — have created a bumpy ride! All these cumulative factors converged when Nvidia announced a $5.5 billion inventory write-down in mid-April (1Q26), resulting in the stock dropping below the “watershed” $100 mark. Since that time, Nvidia shares have been on a “scream,” increasing 68% to record highs north of $160 a share — touching the $4 trillion market-cap ceiling.

One of the biggest concerns surrounding Nvidia’s future viability was DeepSeek’s announcement in January that this new Chinese AI model would require fewer processors to run, with equivalent computing power. This led to a 20% drop in the Nvidia share price. DeepSeek seemingly opened the door for developers to develop powerful AI systems without requiring as many Nvidia chips to run as LLMs. Even though DeepSeek trained its V3 model utilizing the H800 and would not have been possible without Nvidia’s GPUs.

The DeepSeek scare was followed by share pressure as investors worried that a recent deceleration in data center revenue growth from the top IaaS players — Microsoft, Amazon and Alphabet — would begin to impact CapEx budgets. That deceleration trend began in the second half of 2024. One of the biggest outstanding questions for the broader technology sector is whether the mega scalers will continue to spend heavily on CapEx. At this point, the answer is yes. The "circular CapEx" story at the top of the market remains intact with large tech firms investing in AI infrastructure driving demand for semis, software and services. Furthermore, with U.S. President Donald Trump’s administration receiving large investment commitments, one has to believe the boom will continue, at least in the near term.

Of the top four hyperscalers — Amazon, Microsoft, Meta and Alphabet — are collectively estimated to spend north of $330 billion (+38% Year over Year (YoY)) in CapEx in 2025 to build out their AI presence. This compares to a combined CapEx estimate spend rate of $240 billion in 2024. Another top data center cloud player, Oracle, recently added to this rosy strong data center demand picture. Oracle recently gave an upside forecast for FY2026. Oracle guided to revenue growth of at least 16%, including Cloud services growth of 40% and Infrastructure growth of 70% YoY. Oracle’s revenue growth is set to accelerate, as its cloud business (44% of total) becomes a larger part of the mix, driven by growth in SaaS apps, Autonomous Database (AD) and new workloads moving to Oracle Cloud Infrastructure.

With these CapEx worries seemly put aside for now, many investors raised questions surrounding Nvidia’s delays in the production of the latest Grace Blackwell System. Many questioned Nvidia’s ability to execute overall around the challenges of ramping Blackwell architecture. Understandably, it is not hard to acknowledge the headline risk to the stock that comes with stories of potential delays.

Despite these jitters, after Nvidia had almost no revenue for Blackwell in 3Q25 (October), then posted $11 billion in sales for 4Q25 (January). Blackwell ramped at scale during 1Q26 (April), helping drive Nvidia’s 73% YoY increase in data center revenue, which has now reached $39.1 billion. Blackwell contributed nearly 70% of data center compute sales, with the Hopper-to-Blackwell transition nearing completion. No chipmaker in history has ever had to ramp a single semiconductor product to nearly $40 billion in just two quarters with this type of complexity of the Blackwell chips and of rack scale solutions.

With competition mounting from both traditional and nontraditional chipmakers, is Nvidia still the “king of the hill?” Nvidia continues to be in the pole position in the AI chip race with an estimated 80% market share. But other traditional chip companies are in the pack — Advanced Microdevices (AMD), Broadcom, Intel (INTC) and Marvell Technology (MRVL). Nvidia has competition from many non-traditional chip players with Amazon (Trainium 3/Inferencia 3), Microsoft (Colbalt 100) and Meta (MTIA v1) all producing their own proprietary AI chips. Despite all this competition, Nvidia appears to be in the top spot! Nvidia’s Data Center segment now generates six times the revenues of both INTC’s/AMD’s combined data center units! For FY2026, Nvidia’s data center business is expected to increase 58% YoY to revenues of $182 billion, from $115.2 billion in FY2025, with AI being the major catalyst. This compares to both AMD’s and Intel’s data center segments that are expected to generate $15.465 billion and $14.69 billion, respectively for FY2026!  With the rollout of Nvidia’s new Blackwell family of chips, Nvidia is quite motivated to use B100/B200/B300 to blunt the momentum of competition from AMD/INTC/MRVL.

With the recent share price resurgence, are Nvidia shares simply overvalued? The biggest doubt hanging over Nvidia stock is whether sales growth will slow later this year as customers transition from the Hopper series to new Blackwell chips. The Blackwell is scheduled to ramp up in 1H25. This lag and the difficult comparisons cast a shadow over the current lofty valuation. Nvidia’s valuation is not for the faint-hearted as the stock is trading at 52 times trailing earnings. The price-to-book (P/B) ratio stands at 47x. To grasp the enormity of Nvidia’s P/B multiple the Philadelphia Semiconductor Index (SOX) trades at just 5.7x P/B! However, due to the recent selloff in Nvidia shares, the stock trades at just 37x  FY2026 EPS-adjusted estimates of $4.33 a share. Nvidia shares traded at a 10-year historical average P/E of 55x earnings. So based on these forward EPS projections, the stock does not seem overvalued! Technically, the shares look attractive in the $120-$125 price range.