Apple and Microsoft are the world's two most valuable companies as measured by market cap.
After losing nearly $1 trillion in market value, Nvidia now trails Apple and Microsoft.
Nvidia has a lot of tailwinds that could fuel growth throughout the remainder of the year -- helping the company win back investor confidence.
For the last two and a half years, the technology sector has witnessed an abnormal level of interest compared to other industries. By no stretch of the imagination, this dynamic is connected to unrelenting euphoria surrounding artificial intelligence (AI).
What's interesting, however, is that the AI theme can largely be traced to a small concentration of megacap stocks. Known as the "Magnificent Seven," Apple, Microsoft, Nvidia (NASDAQ: NVDA), Alphabet, Amazon, Meta Platforms, and Tesla are some of the most widely held stocks in the S&P 500(SNPINDEX: ^GSPC) right now.
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As of May 1, Nvidia is the third-largest company in the world as measured by market cap -- sitting behind just Apple and Microsoft. Let's explore some of the factors that have influenced Nvidia's valuation throughout 2025. More importantly, I'll detail what catalysts could fuel Nvidia to become the most valuable company in the world by year-end.
Why is Nvidia stock plummeting?
It's been a tumultuous year for Nvidia. As of this writing, the stock has plummeted by 15% -- more than triple the declines seen in the S&P 500.
To quantify just how much value Nvidia has lost, consider the company's current market cap is nearly $1 trillion lower than peak levels seen in January.
The first large-scale sell-off in Nvidia stock happened earlier this year, after a Chinese start-up called DeepSeek emerged out of nowhere. DeepSeek claimed that it built an AI platform on par with many leading models built here in the U.S., but was able to do so by using older Nvidia architectures.
For a brief period, investors started to question what demand would look like for Nvidia's next-generation chipsets. After several weeks of investigative reporting from Wall Street analysts and technology journalists, it began to emerge that there was likely more to DeepSeek's initial assertions.
The current sell-off in Nvidia revolves around a nasty storm related to new tariff policies. More specifically, ongoing tension between the U.S. and China has some investors seriously worrying about Nvidia's potential in the Chinese market as it now battles a much tougher landscape featuring capable competition from Huawei.
Image source: Getty Images.
Why I think Nvidia will be worth more than any other Magnificent Seven stock by year-end
I see Nvidia as a more critical player to the overall development of AI-powered services compared to Apple and Microsoft. I think both Apple and Microsoft will face more scrutiny from investors in coming quarters. Demand for iPhones in the Chinese market and here domestically could take a toll thanks to mounting pressures surrounding the ongoing tariff situation. Meanwhile, Microsoft's primary catalyst of cloud computing services faces a tough competitive landscape from Google and Amazon.
Now that May has arrived, investors are set to receive a number of updates as many of the world's leading technology companies report earnings for the first calendar quarter of 2025. As of closing bell on April 30, Microsoft, Meta Platforms, and Alphabet -- each of which works closely with Nvidia -- have reported earnings.
During Alphabet's first-quarter call, management reaffirmed prior guidance to spend $75 billion in capital expenditures (capex) this year. In addition, Microsoft doubled down on its own capex plans for the second half of the year while Meta actually increased its prior guidance.
These are important themes to understand. If Nvidia's largest customers were not seeing robust demand for their own AI services, then it's likely they would pull back their infrastructure budgets. However, despite a turbulent macroeconomic environment, big tech appears to be confident in the long-run potential of the AI revolution -- hence, they remain committed to spending tens of billions on data centers, servers, chips, networking equipment, and more.
To me, these dynamics support the idea that Nvidia should remain a top vendor as tech giants continue building their AI infrastructure. Moreover, I think Nvidia is best positioned among the Magnificent Seven to benefit from AI capex tailwinds. For these reasons, I think Nvidia should witness strong demand for its GPUs and various other services throughout the second half of the year.
I am optimistic that investor confidence will begin to sway in Nvidia's favor again -- propelling the company to a much higher valuation than where it is today and surpassing that of its Magnificent Seven peers.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
