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Nvidia briefly hits $4 trillion market value, cementing AI leadership

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Nvidia (NVDA.O) briefly reached a market capitalization of $4 trillion on Wednesday, becoming the first company ever to hit this milestone and reaffirming its dominance in the artificial intelligence (AI) sector. Shares surged as much as 2.8% to an all-time high of $164.42 before closing up 1.8%, giving Nvidia a market value of approximately $3.97 trillion.

This milestone reflects Wall Street’s strong confidence in Nvidia’s leading role in powering AI innovation, with its high-performance chips crucial to advancements in the technology. Robert Pavlik, senior portfolio manager at Dakota Wealth, remarked that the rally “highlights the fact that companies are shifting their asset spend in the direction of AI,” which he sees as the future of technology.

Nvidia’s stock has seen a remarkable recovery after a slow start in 2025, which was rattled by competition from Chinese AI models like DeepSeek. The company reached a $1 trillion valuation in June 2023 and has since nearly quadrupled in value within about a year—outpacing other tech giants like Apple and Microsoft, the only other U.S. firms with market caps above $3 trillion.

Microsoft, the second most valuable U.S. company, closed Wednesday at $503.51 per share with a $3.74 trillion market cap. Nvidia’s rally has lifted it by approximately 74% from its April lows, coinciding with renewed optimism about U.S. trade relations.

Currently, Nvidia represents 7.3% of the S&P 500 index, slightly more than Apple’s 7% and Microsoft’s 6%. Its valuation now surpasses the combined stock market value of Canada and Mexico, as well as all publicly listed companies in the UK.

Despite its high valuation, Nvidia’s 12-month forward price-to-earnings ratio stands at 32, below its three-year average of 37.

While Nvidia’s GPUs dominate AI workloads, rivals such as Advanced Micro Devices (AMD) and others are seeking to chip away at its market share by offering more affordable alternatives. Meanwhile, major customers like Amazon, Microsoft, and Alphabet face investor pressure to moderate their AI spending.

Nvidia posted $44.1 billion in revenue for the first quarter of 2025, a 69% increase year-on-year. For the second quarter, the company projects revenue around $45 billion, plus or minus 2%, with earnings due on August 27.

Year-to-date, Nvidia’s stock is up about 22%, outperforming the Philadelphia Semiconductor Index’s roughly 15% gain.

DeepSeek’s Chatbot Scores Low in NewsGuard Audit, Trails Western Rivals

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DeepSeek, a Chinese AI startup, saw its chatbot underperform in a recent NewsGuard audit, achieving just 17% accuracy in delivering accurate news and information. The audit compared DeepSeek’s chatbot with Western AI models, including OpenAI’s ChatGPT and Google’s Gemini, ranking it tenth out of eleven. DeepSeek’s chatbot was found to repeat false claims 30% of the time and provide vague or unhelpful answers 53% of the time in response to news-related queries, leading to an overall fail rate of 83%. In contrast, Western competitors had an average fail rate of 62%.

This performance raises questions about the quality of DeepSeek’s AI technology, which the company has touted as being on par with or superior to OpenAI’s models, at a fraction of the cost. Despite its low accuracy score, DeepSeek’s chatbot quickly became the most downloaded app on Apple’s App Store, igniting concerns about the United States’ dominance in AI and contributing to a market downturn that resulted in a $1 trillion loss in U.S. tech stocks.

NewsGuard used 300 identical prompts to assess DeepSeek and its Western counterparts, including 30 based on false claims circulating online. The topics of these prompts included incidents like the killing of UnitedHealthcare executive Brian Thompson and the downing of Azerbaijan Airlines flight 8243. DeepSeek’s chatbot also reiterated the Chinese government’s stance on certain issues, even when those topics were unrelated to China, such as in the case of the Azerbaijan Airlines crash.

Despite its poor accuracy, some analysts suggest the significance of DeepSeek’s breakthrough lies in its affordability, with D.A. Davidson’s Gil Luria pointing out that it can answer questions at 1/30th the cost of comparable models. However, as with other AI models, DeepSeek was found to be particularly susceptible to repeating false claims, especially when used to create or spread misinformation.

 

Nasdaq Hits Historic 20,000 Mark, Fueled by Big Tech Rally

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The Nasdaq Composite Index (.IXIC) reached an unprecedented milestone on Wednesday, closing above 20,000 for the first time. This historic achievement caps a year of remarkable gains driven by enthusiasm for artificial intelligence (AI) and expectations of declining interest rates. The index climbed 1.8% on the day to close at 20,034.89, marking a more than 33% surge in 2024.

The rally has been propelled by major technology companies, including Apple, Nvidia, Alphabet (Google’s parent company), and Tesla. These tech giants, collectively known as “megacap” stocks, have increasingly dominated the index. Nvidia, in particular, has seen explosive growth, with its shares soaring over 1,100% since their October 2022 low, thanks to its leading role in AI chip production.

Wednesday’s gains were spurred by a U.S. inflation report that reinforced expectations of an upcoming Federal Reserve rate cut. However, the dominance of megacap stocks, which now account for 59% of the Nasdaq’s weighting, raises questions about potential risks if these companies lose investor favor.

The index’s journey reflects resilience and recovery. After tumbling in early 2020 due to the pandemic, the Nasdaq rebounded swiftly as the Federal Reserve slashed interest rates and the U.S. government implemented substantial fiscal stimulus. Although it faced a sharp 33% decline in 2022 amid soaring inflation and aggressive Fed rate hikes, the index has since surged nearly 90%, buoyed by investor excitement over AI’s transformative potential.

Despite its current valuation at 36 times earnings—well above the long-term average of 27—the Nasdaq remains far from the extremes of the dot-com bubble when it reached a price-to-earnings ratio of 70. Analysts suggest that while the recent rally is robust, it appears more sustainable compared to the late 1990s tech boom.

The tech-heavy Nasdaq has outperformed other major U.S. indexes in 2024, with its 33% gain surpassing the S&P 500’s 27% increase and the Dow Jones Industrial Average’s 17% rise. Over the past decade, the Nasdaq has climbed by over 320%, significantly outpacing the S&P 500 and Dow, which have risen 200% and 150%, respectively.

Still, concerns linger over valuation and concentration risks. Cameron Dawson of NewEdge Wealth noted the challenge of sustaining this momentum into 2025 amid high growth expectations and elevated stock prices. The concentration of megacap stocks amplifies the risk of downturns, as evidenced by the steep declines in Meta and Tesla during 2022.

As investors ride this wave of optimism, questions remain about whether the Nasdaq’s remarkable performance can continue, especially as the market’s focus remains on AI innovation and monetary policy shifts.