Nvidia, the second most valuable U.S. tech company after Apple, experienced a notable market cap dip on Thursday. Despite reporting earnings that exceeded analysts' expectations, Nvidia's shares slumped over 8%, causing its market capitalization to fall below the $3 trillion mark. The company had previously achieved this milestone in June 2024.
Nvidia's demand for its chips remains robust, fueled by the next-generation AI models requiring increased computing power. The tech giant continues to hold a dominant position in the semiconductor industry, even surpassing Microsoft, one of its biggest customers, in terms of market value. Nvidia recently signaled a promising start to its fiscal 2026, with most production issues for its upcoming Blackwell chip now resolved.
On Wednesday, Nvidia reported impressive financial results, with revenue jumping 78% from the previous year to $39.33 billion. This growth was largely driven by its data center revenue, which surged 93% annually to nearly $36 billion. Major cloud service providers such as Microsoft, Google, and Amazon contributed significantly, accounting for approximately half of this revenue.
The company's strong earnings underscore its reliance on substantial infrastructure spending from the world's largest tech firms. However, Nvidia's shares have lost 10% of their value in 2025 due to investor concerns over export controls, tariffs, more efficient AI models, and a decelerating growth pace.
"About how best to answer," remarked Nvidia CEO Jensen Huang.
Despite these challenges, Nvidia remains five times more valuable than it was two years ago at the onset of the generative AI boom. The company's strategic positioning in the AI and semiconductor markets suggests continued demand for its products, even as it navigates industry headwinds.