Nvidia (NVDA +3.71%) has shed an astounding $800 billion in market cap since it hit its all-time high in mid-May. The company, while still worth close to $5 trillion, is back down to valuation levels relative to trailing earnings that it hasn't seen since 2019. At one point during the decline, Nvidia was trading at about 18 times forward earnings, but the price has rebounded slightly since then. As of the close Thursday, its forward P/E was 22.6 -- unusually cheap for the chipmaker.
Investors should take advantage of the dip. The sell-off more closely resembles a sector rotation than a red-flag warning about Nvidia's business, as other semiconductor companies also were hit hard recently.
NASDAQ: NVDA
Key Data Points
There's a lot to love about Nvidia right now. Management's decision to substantially increase the company's dividend, paired with the announcement of an additional $80 billion buyback program, suggests Nvidia believes that rewarding shareholders with income, not just growth, is important at this stage.
Nvidia maintains market-share dominance, holding 97% of the server graphics processing unit (GPU) market for artificial intelligence chips as of the end of 2025, according to Bloomberg Intelligence. The company reported record revenue of $81.6 billion just this past quarter, an 85% increase from the prior-year period. Data center revenue jumped 92%. This is not a company on the decline.
Image source: The Motley Fool.
Competition and pressure on margins from rising costs are concerns, but those issues are not unique to Nvidia.
Though the stock has taken a precipitous fall from its all-time high over the past month, Nvidia's business fundamentals don't just remain intact -- they are continuing to improve. Investors should not panic, but should instead view this dip as a chance to buy a "Magnificent Seven" stock at a great price for a promising long haul.
