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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.

Wall Street Ends Strong Holiday Week with Broad Sell-Off

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Wall Street’s week ended on a sour note Friday, with major indexes experiencing a broad sell-off that overshadowed gains earlier in the shortened holiday week. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all posted losses as investors took profits and adjusted portfolios ahead of the new year.

The Dow Jones Industrial Average fell 333.59 points, or 0.77%, to close at 42,992.21, ending a five-session winning streak that had followed its longest losing run since 1974. The S&P 500 dropped 66.75 points, or 1.11%, finishing at 5,970.84, while the Nasdaq Composite lost 298.33 points, or 1.49%, to end at 19,722.03.

Michael Reynolds, Vice President of Investment Strategy at Glenmede, attributed the losses to profit-taking, stating, “We are more than two years into a strong bull market, so it’s not surprising to see some people rebalancing portfolios.” The decline also interrupted the anticipated “Santa Claus rally,” a seasonal trend where stocks typically rise in the final five sessions of December and the first two sessions of January.

The market was further pressured by rising U.S. Treasury yields, with the benchmark 10-year yield hovering near a seven-month high of 4.63%. Higher yields increase borrowing costs, posing challenges for growth stocks, particularly the “Magnificent Seven” tech giants that have driven much of 2024’s market rally.

Tesla led the group’s declines for a second consecutive day, dropping 5%, while Nvidia, Alphabet, Amazon, and Microsoft all shed over 1.5%. Glenmede’s Reynolds noted that rising rates prompted investors to reassess valuations on these high-growth stocks, potentially seeking better opportunities elsewhere.

All 11 major S&P sectors recorded losses, with the hardest-hit being 2024’s leading sectors—consumer discretionary, information technology, and communication services—which fell between 1.1% and 1.9%.

Despite Friday’s pullback, the major indexes posted weekly gains. The S&P 500 rose 0.7%, the Nasdaq gained 0.75%, and the Dow added 0.36% for the week.

Some stocks bucked the trend. Amedisys surged 4.7% after extending the deadline for its $3.3 billion merger with UnitedHealth, while Lamb Weston climbed 2.6% following activist investor Jana Partners’ push for board changes.

Trading volumes remained below the six-month average due to the holiday-shortened week and are expected to stay subdued until January 6. Investors now shift their focus to the December employment report, scheduled for release on January 10.

 

Wall Street Reaches Record Highs Following Trump’s Presidential Election Win

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Wall Street surged to record levels on Wednesday as Donald Trump’s election victory propelled key U.S. market indexes higher. In a comeback that restores him to the White House four years after his first term ended, Trump’s win sparked optimism for tax cuts and deregulation, although market watchers noted potential challenges from possible tariff hikes, which could drive up inflation and the federal deficit.

Trump’s victory spurred a rally in “Trump trades,” with U.S. Treasury yields rising, the dollar strengthening, and Bitcoin hitting a record high. “The market response indicates that a Trump victory was not fully priced in, reflecting an extension of the ‘Trump trade’ that assumes Republicans will control both the House and Senate,” noted Candice Bangsund, a portfolio manager at Fiera Capital.

Domestic-focused stocks surged on the news, especially in the small-cap Russell 2000 index, which jumped 4.7% to a nearly three-year high. Small-cap stocks are expected to benefit from lower regulatory burdens, favorable tax policies, and minimal exposure to potential import tariffs. “Small caps are poised for a strong catch-up trade over the next 6-12 months,” said Sean Gallagher, Lazard’s global head of Small Cap Equity.

The market volatility index (VIX) dropped nearly five points, reaching its lowest level since September, as investors embraced the likelihood of a stable policy environment.

In individual market performance, the Dow Jones Industrial Average rose 1,345 points (3.19%) to reach 43,566.98, the S&P 500 climbed by 120.78 points (2.1%) to 5,903.45, and the Nasdaq Composite rose 436.48 points (2.37%) to 18,875.65. Financials led the S&P 500’s gains with a 5.5% surge, while the KBW Bank Index recorded its best day in four years. Energy, Industrials, and Consumer Discretionary sectors each gained around 3%, while rate-sensitive sectors like Real Estate and Utilities saw declines due to concerns that Trump’s policies might increase inflation, reducing the likelihood of future rate cuts—a significant driver of recent rallies.

The Federal Reserve is anticipated to reduce interest rates by 25 basis points on Thursday. However, with Trump’s policies expected to increase inflationary pressure, traders have begun lowering their expectations for additional rate cuts next year. Bangsund commented, “The sharp rise in Treasury yields may weigh on stock valuations.”

Stocks projected to benefit under Trump’s second term posted strong gains, including Trump Media & Technology Group, which rose 9.3%. Tesla also jumped 14%, likely influenced by Elon Musk’s vocal support for Trump’s campaign. Gains extended to cryptocurrency companies, energy stocks, and prison operators, while renewable energy stocks experienced declines.

Attention has now turned to whether Republicans will retain their newly gained majority in the Senate and potentially secure the House of Representatives, an outcome that could further shape the market’s trajectory over the next four years.