Nvidia (NASDAQ: NVDA) first reached a market cap of $3 trillion in June 2024. The giant GPU maker remained above the threshold throughout much of the next eight months before a steep sell-off this year.
However, Nvidia just rejoined Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) in the $3 trillion club. Could it even become the first $4 trillion stock by 2026?
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Bouncing back
What did Nvidia do to bounce back? Nothing on its own. To understand the stock’s rebound, we need to first understand why it fell in the first place.
One main culprit for Nvidia was the Trump administration’s strict trade restrictions on exports of H20 GPUs to China. Nvidia announced it would take a $5.5 billion writedown in the first quarter of 2025 as a result.
The White House’s tariffs have also had a major impact on Nvidia’s share price (as they have on many other stocks, too). In particular, the especially steep tariffs on imports from China and the retaliatory tariffs the country levied on U.S. imports concerned investors.
With those factors causing Nvidia stock to fall, it makes sense that more encouraging news on the trade front helped spark a comeback. Initial signals in recent weeks by the Trump administration that Chinese tariffs would be lower helped. The recent 90-day pause on some of the tariffs provided more reason for optimism.
The first $4 trillion stock
While Nvidia is again in the $3 trillion club and even inched past Apple’s market cap, Microsoft is closest to the $4 trillion mark. But could Nvidia jump past Microsoft and remain ahead of Apple? It’s quite possible.
Microsoft’s shares trade at nearly 30 times forward earnings. Apple’s forward earnings multiple is roughly 27. Nvidia is a hair behind with shares trading at 26.9 times forward earnings. All else being equal, this lower valuation arguably gives Nvidia more room to run than Microsoft and about the same amount as Apple.
Image source: Getty Images.
However, the growth prospects for these tech giants aren’t equal. Wall Street expects Nvidia’s earnings to soar around 47% this fiscal year and 29% in the next fiscal year. By comparison, analysts look for Apple’s earnings to increase 18% this year and 9% next year, with Microsoft delivering earnings growth of almost 14% this year and nearly 13% next year.
I think Nvidia is in a stronger position to become the first $4 trillion stock than either Apple or Microsoft. Others, such as Amazon and Google parent Alphabet, are also contenders, but I view them as dark horses in the race.
By 2026?
But could Nvidia achieve a $4 trillion market cap by 2026? I’m less confident about the timing.
While investors are understandably excited about the lower threat of a full-blown trade war between the U.S. and China, it seems likely that significant tariffs will still be imposed. These tariffs could still put a damper on Nvidia’s business to some extent.
A possible economic slowdown due to the tariffs could also cause some companies to curtail their investments in artificial intelligence (AI), which could negatively impact data center growth. If so, the demand for Nvidia’s GPUs could slip.
Nvidia’s market cap would need to jump by roughly 25% to hit $4 trillion. I think this level of increase could be attained over the next 18 months or so. However, many variables are at play that could make the goal harder to achieve in such a relatively short time. I predict that Nvidia will be the first $4 trillion stock, but I’ll leave the date by which it reaches the mark open.
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Suzanne Frey, an executive at Alphabet, 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. Keith Speights has positions in Alphabet, Amazon, Apple, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, and Nvidia. 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.
