• NVIDIA’s market cap fell below $5 trillion, down 2.6% on the day.
  • The drop reflects broader tech sell-off and investor jitters over AI spending.
  • Analysts say the pullback is a valuation correction, not a fundamental shift.

NVIDIA Corp. slipped below the $5 trillion market capitalization mark on Thursday, falling 2.6% as a wave of selling swept through AI and semiconductor stocks. The chipmaker’s shares closed at $1,020, pushing its valuation to roughly $4.98 trillion, according to people familiar with the matter.

The decline comes after a volatile stretch for the company, which had briefly topped $5.1 trillion earlier this month. The reversal mirrors a broader reassessment of AI-related equities, as investors weigh the sustainability of massive capital expenditure against rising interest rates and regulatory uncertainties.

“It’s a classic growth-stock shakeout,” said an analyst at a major investment bank who asked not to be named. “NVIDIA’s fundamentals — its data-center GPU sales, its software ecosystem — remain intact. But the market is repricing risk, and that hits the highest-beta names first.”

Attempts to reach NVIDIA for comment were not immediately returned.

The sell-off amplified after a report showed U.S. jobless claims falling more than expected, stoking fears that the Federal Reserve will keep rates higher for longer. That backdrop has weighed on the entire tech sector, with the Nasdaq 100 dropping 1.8% on the day.

NVIDIA’s descent below $5 trillion marks a psychological threshold, but many analysts see limited downside from here. “We’ve seen this movie before — NVIDIA drops 10%, people panic, then earnings come in strong and it rallies,” said a portfolio manager at a hedge fund with a large tech stake. “We used the dip to add.”

The company remains the dominant supplier of GPUs for AI training and inference, with its upcoming Blackwell architecture generating significant prelaunch buzz. Still, sentiment has soured as competitors like AMD (AMD) and Intel step up their chip offerings and export controls on advanced semiconductors to China weigh on the addressable market.

Correction: An earlier version of this article misstated NVIDIA’s closing price. It has been corrected to $1,020.

Update: NVIDIA shares slid further in after-hours trading, dipping another 0.4%.