After Losing More Than $1 Trillion in Market Cap Earlier This Year, Nvidia Has Reclaimed Its Position as the World's Most Valuable Company. Here's Why I Think It's Headed Even Higher.

Key Points

• Following the stock's swift sell-off in early 2025, Nvidia has recovered just as quickly to reach a new all-time high.

• Thanks to that rebound, the chip giant is once again the most valuable company in the world as measured by market cap.

• Nvidia has a number of new catalysts that have yet to contribute meaningful growth to the business.

• 10 stocks we like better than Nvidia ›

The first several months of 2025 were painful for Nvidia (NASDAQ: NVDA) investors. Back in April, Nvidia's market capitalization bottomed around $2.3 trillion -- representing a 37% decline from the peak it reached just three months earlier.

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There were a number of factors that influenced Nvidia's sell-off.

First was the emergence of a Chinese start-up called DeepSeek, which claimed to build its impressive R1 artificial intelligence (AI) model using older Nvidia chips. This led some investors to fear that Nvidia's newest, high-priced chipsets may no longer be necessary to support the world's growing AI infrastructure.

Beyond DeepSeek, investors were also concerned about how new U.S. tariff policies would impact Nvidia's growth prospects overseas. Lastly, rising competition from Advanced Micro Devices, as well as investment in custom silicon from cloud hyperscalers like Microsoft, Amazon, and Alphabet, gave credence to the idea that Nvidia's best days may be in the rearview mirror.

However, following a bullish earnings report back in May, investors seem to now consider these concerns overblown. As of July 11, Nvidia's market cap is just over $4 trillion -- making the semiconductor darling the most valuable business in the world once again.

With shares rocketing higher, it's worth taking a look at Nvidia's valuation trends to assess whether the stock remains a good buy or if some investors have missed the boat.

Analyzing Nvidia's valuation multiples

The chart below illustrates Nvidia's price-to-sales (P/S) and forward price-to-earnings (P/E) multiples over the last few years.

Data by YCharts.

As you can see, Nvidia's current P/S and forward P/E ratios are well below the highs previously seen during the AI revolution. To be clear, this does not necessarily mean Nvidia is destined to reach or eclipse its prior P/S of 46 and forward earnings multiple of 51.

Furthermore, the company's multiples do not necessarily need to expand in order for the company to increase in value. Nvidia's future valuation hinges on the company's growth potential.

Lets explore some catalysts that could lead to meaningful growth for Nvidia over the next several years.

What catalysts does Nvidia have?

For the last few years, the majority of Nvidia's growth has come from its data center operation. Nvidia designs industry-leading GPUs that are used by the world's largest businesses in their development of generative AI capabilities.

However, the company has a number of opportunities outside of AI data centers that investors may be overlooking.

First, companies such as Tesla and Alphabet have invested billions developing autonomous driving technology. Nvidia is tapped into self-driving cars too -- during the first quarter, it generated $567 million in sales from its automotive services businesses. This represented 72% year-over-year growth, giving the segment an annual revenue run rate of $2.3 billion. To put that into perspective, Nvidia's data center business generates well over $100 billion in sales per year.

While the automotive segment is unlikely to become as large as the data center business, I'm confident Nvidia has much more room to grow in this area as autonomous vehicle technology continues to scale. With partners including General Motors, Toyota Motor, Mercedes-Benz, Volvo, Rivian Automotive, BYD and many more, Nvidia stands to benefit from the broader rise of self-driving cars, making the company an agnostic beneficiary of the autonomous vehicle opportunity.

Another related opportunity is the rise of AI-powered robotics. Companies such as Tesla and Figure AI are building humanoid robots that are meant to facilitate the workforce in labor-intensive environments such as warehouses. Moreover, Amazon is integrating a number of robotics-driven processes into its fulfillment centers in order to drive more efficiency.

Nvidia is an investor in Figure AI, and CEO Jensen Huang has touted robotics as multitrillion-dollar opportunity within the broader AI realm.

Lastly, while companies such as IonQ and Rigetti Computing fetch most of the attention in the world of quantum computing, Nvidia is not a name investors want to sleep on.

Outside of hardware, Nvidia also develops an AI software platform called CUDA. The company has quietly adapted this architecture for other applications with quantum computing being one of them via the introduction of the CUDA-Q platform.

Image source: Getty Images.

Is Nvidia stock a buy right now?

One thread that stitches autonomous driving, robotics, and quantum computing together is that all three technologies are incredibly nascent. Their commercial reach remains limited, but each has the potential to disrupt a number of industries on a global scale. And Nvidia sits right in the middle with the chips and software to power these technologies.

With Nvidia's valuation multiples down from their peak levels, many investors may see the business as a maturing operation. Others may have doubts around Nvidia's ability to continue accelerating growth and are therefore pricing in some of this risk.

Given the ideas explored above, I think Nvidia stock is headed higher in the long-run. The resiliency of the company's share price combined with numerous opportunities capable of unlocking further revenue and profits has me optimistic that Nvidia will eclipse its current valuation in the long run.

For these reasons, I think now is a compelling time to scoop up some shares of Nvidia and prepare to hold on tight. The next growth wave appears to be just getting started.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nvidia, and Tesla. The Motley Fool recommends BYD Company and General Motors and 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.