Nvidia Stock Tumbles 16% Since May High, Market Cap Loses $1 Trillion as Forward P/E Falls to 18x

Since May 14, Nvidia's stock has fallen approximately 16%, with the company's market capitalization evaporating over $1 trillion in two months. The decline has pushed the chipmaker's forward price-to-earnings (P/E) ratio to around 18x, marking the lowest level since early 2019. This valuation now sits below the S&P 500's forward P/E of over 20x and the Nasdaq-100's near 23x.

According to analysts including Accuvest Global Advisors' Eric Clark, the repricing stems not from fundamental deterioration but rather a rotation in market sentiment and capital reallocation. "The stock ran up too fast and trading is extremely crowded; the market now wants exposure in other directions, and Nvidia has become a source of funds," Clark said. Analysts note Nvidia's correlation with semiconductor peers has hit its lowest level since 2014, indicating a significant shift in market positioning and AI trade dynamics.