Nvidia becomes first $5 trillion firm as AI rally picks up steam

Nvidia Corp. achieved a historic $5 trillion market capitalization on Wednesday as Chief Executive Officer Jensen Huang’s spree of deals catapults the artificial intelligence frenzy to new heights.

The shares rallied as much as 5.2% to $211.47 as of 9:36 a.m. New York time, propelling Nvidia over the milestone. It’s only been four months since the company cracked the $4 trillion barrier, and the rally has accelerated as Huang forges new agreements to supply companies from Nokia Oyj to Samsung Electronics Co. and Hyundai Motor Group with chips. 

In a bull market that’s been driven by optimism for AI to revolutionize the global economy, Nvidia stands in a league all its own. With a 50% gain this year through Tuesday’s close, the stock is single handedly responsible for nearly a fifth of the S&P 500 Index’s 17% advance in 2025. The next two biggest companies are Microsoft Corp. and Apple Inc., with valuations of about $4 trillion each.

“A $5 trillion market cap would have been unimaginable a few years ago,” said Keith Lerner, chief investment officer and chief market strategist at Truist Advisory Services. “The market is certainly putting a lot of stock into the idea that AI will be transformational.” 

Nvidia shares climbed on Tuesday after US President Donald Trump said he expects to speak with China’s Xi Jinping about the company’s Blackwell chip. Trump said months ago he’d consider allowing Nvidia to export to China a downgraded version of its Blackwell processor, and the hope is that such a deal might be on the table. 

Huang also announced a flurry of new partnerships and dismissed concerns about an AI bubble, saying the latest chips are on track to generate half a trillion dollars in revenue. The company also unveiled a new system to connect quantum computers with its artificial intelligence chips.

Wall Street analysts are overwhelmingly bullish on the firm’s future prospects. Of the 80 analysts tracked by Bloomberg that cover the company, more than 90% have given its stock a buy-equivalent rating, with only one — Seaport Global Securities analyst Jay Goldberg — rating it a sell. The average price target for the shares is $225.48, implying upside of about 7%.

Nvidia shares are priced at less than 34 times estimated earnings, below their five-year average of about 39, and not far from the Philadelphia Stock Exchange Semiconductor Index at 29 times.

Still, given the dramatic gains recently, there’s plenty of skepticism that Nvidia shares can keep soaring. The stock is already up more than 1,300% since the end of 2022. Dan Eye, chief investment officer at Fort Pitt Capital Group, said Nvidia is likely to cede some market share to competitors like Advanced Micro Devices Inc. and Broadcom Inc.

“If what everyone is betting on with AI comes to fruition, then valuations are probably justified, but certainly some of it might be difficult to live up to,” he said. “It’s been tough to not own Nvidia, but it really is priced for elevated expectations.”