Nvidia Corp. (NVDA) shares tumbled as much as 5% on May 15, significantly underperforming the broader market. The pullback came a day after Nvidia hit a fresh 52-week high above $236 per share, pushing its market capitalization to $5.7 trillion. That valuation surpassed the entire global silver market, estimated at around $5 trillion, making Nvidia the world’s second-most valuable asset—trailing only gold, which is worth approximately $33 trillion.
The sell-off represents a classic case of profit-taking ahead of a major earnings announcement, following a 15% rally over the past month. Over the last year, Nvidia’s stock has surged 74%, and the company has added more than $5 trillion to its market value in just five years—a feat virtually unprecedented in capital markets history. Yet despite these eye-popping numbers, Nvidia’s valuation is underpinned by remarkably strong fundamentals rather than speculative froth.
For its fiscal fourth quarter ended January 25, 2026, Nvidia reported revenue of $68.1 billion, representing a 73% year-over-year increase. This marked an acceleration from 62% growth in the third quarter and 56% in the second quarter. The company’s data center segment, which now accounts for over 90% of total sales, was the primary driver, climbing 75% to $62.3 billion.
Equally impressive is Nvidia’s profitability profile. The company posted a non-GAAP gross margin of 75.2% in the fourth quarter, up from 73.6% in the previous quarter. For the full fiscal 2026, Nvidia generated approximately $97 billion in free cash flow, demonstrating extraordinary cash-generating capabilities.
“Computing demand is growing exponentially—the agentic AI inflection point has arrived,” Nvidia CEO Jensen Huang said in the company’s earnings release.
Building on this momentum, Nvidia provided an aggressive outlook for its fiscal first quarter of 2027, projecting revenue of approximately $78 billion, plus or minus 2%. At the midpoint, this would represent roughly 77% year-over-year growth.
With just a 5% increase needed to reach a $6 trillion valuation, the target appears within reach. The combined capital expenditures of the world’s four largest cloud providers—Alphabet, Amazon, Meta Platforms, and Microsoft—are expected to total around $700 billion this year, and Nvidia remains the primary beneficiary of this massive infrastructure build-out.
Beyond hyperscalers, Nvidia’s sovereign AI business, which sells chips and infrastructure to national governments and government-backed projects, more than tripled in fiscal 2026 to over $30 billion. Its physical AI segment, encompassing robotics and autonomous vehicles, generated more than $6 billion in revenue last year.
The company’s next major product cycle is also underway. Nvidia shipped initial samples of its Vera Rubin platform earlier this year and plans to begin production shipments in the second half of 2026. The system is expected to deliver up to 10 times higher inference throughput per watt than the current Blackwell platform—a critical advantage amid growing power constraints in data centers.
Nevertheless, significant risks remain. Deep-pocketed customers including Alphabet and Amazon continue to develop their own AI chips to reduce dependence on Nvidia. Additionally, the semiconductor industry has historically been cyclical, and any indication that hyperscaler spending may be peaking could trigger a sharp sell-off in Nvidia shares.
Against this backdrop, Nvidia’s earnings report, scheduled for release after the market closes on May 20, has taken on outsized importance. The results will not only validate the company’s aggressive growth guidance but also determine whether it can continue its march toward a $6 trillion valuation.
If Nvidia once again exceeds market expectations and confirms its growth trajectory remains intact, the recent pullback will likely be viewed as a healthy correction and a buying opportunity for investors. Conversely, a miss or conservative guidance could spark a broader reassessment of Nvidia’s premium valuation, potentially leading to a more significant decline.
Currently trading at approximately 48 times trailing earnings, Nvidia’s valuation is undeniably rich. However, given the company’s nearly 65% overall growth in fiscal 2026 and expectations for further acceleration in the first quarter, the multiple is not entirely unjustified.
For investors, the May 20 earnings report represents a critical inflection point. It will reveal the current health of Nvidia’s business and provide clarity on the future direction of the world’s second-most valuable asset. While the AI revolution is far from over, Nvidia must successfully navigate this upcoming earnings test to continue its historic run.
