NVIDIA Corporation (NVDA) has achieved a significant milestone, becoming the first publicly traded company to reach a $4 trillion market capitalization on Wednesday, July 9, 2025. This historic achievement saw Nvidia surpass tech giants like Microsoft (MSFT) and Apple (AAPL) in market value, with its stock closing at a record high of $162.88 on Wednesday and climbing further to $163.94 in premarket trading on Thursday. The company's shares have demonstrated impressive growth, surging 51% over the past three months and increasing 21% year-to-date, fueled primarily by the explosive demand for artificial intelligence (AI).

Nvidia's dominant position in the market is largely attributed to its specialized chips, including modified Graphics Processing Units (GPUs), and its proprietary CUDA software platform. These offerings are crucial for both training and deploying advanced AI systems, giving Nvidia a substantial competitive edge over rivals such as AMD (AMD) and Intel (INTC). Major technology companies, including Amazon (AMZN), Alphabet (GOOG), Meta (META), Microsoft (MSFT), and Tesla (TSLA), are making substantial investments in Nvidia’s hardware, pouring hundreds of billions into building massive AI data centers. These investments support the development of cloud-based AI services and internal AI models, sustaining robust demand for Nvidia's processors, especially since the advent of generative AI with OpenAI's ChatGPT launch in 2022.

Despite its remarkable success, Nvidia has navigated several challenges that have tested investor confidence. In January, the company experienced a $600 million market capitalization hit following claims by the Chinese startup DeepSeek that it trained its R-1 model using less expensive chips than Nvidia's top-tier offerings. This sparked initial Wall Street concerns about the potential obsolescence of Nvidia’s expensive data center chips and a perceived industry shift from AI model training to inference applications. However, these fears proved unfounded, as Nvidia's chips remain highly effective for training AI models, and inference applications continue to benefit from more powerful processors.

Geopolitical headwinds, specifically U.S. government restrictions on chip sales to China, have also posed a significant challenge. Nvidia reported a $4.5 billion loss in a recent quarter due to these bans and anticipates an even larger impact of up to $8 billion in the current period. Nevertheless, investor confidence in Nvidia remains high, and its stock continues to climb. The company is actively developing solutions to maintain its business in China within regulatory constraints, reportedly planning to launch a new AI chip specifically designed for the Chinese market, a modified version of its Blackwell GPUs. CEO Jensen Huang is even slated to meet with Chinese leaders to discuss these plans.

The broader AI market continues its rapid expansion, with ongoing innovations such as Tesla CEO Elon Musk’s xAI launching its new chatbot Grok 4. This sustained pace of innovation further drives demand for Nvidia's products. Nvidia is also preparing for the release of its next-generation Blackwell Ultra chips, facing no serious competitors in sight, which positions the company for continued dominance in the AI hardware space. Financial indicators further underscore Nvidia's solid standing; its forward P/E ratio is 38.4X, lower than the Electronics Semiconductor industry's 40.0X. While its price-sales ratio of 27.0X is slightly higher than the industry's 22.3X, its price-to-free-cash-flow ratio of 55.7X is nearly in line with the industry's 55.4X, suggesting that the stock is not overvalued compared to its industry peers. Nvidia also holds an upbeat Growth Score of A and a Momentum score of B, making it an attractive option for investors looking to capitalize on the AI growth story through direct investment or ETFs with significant allocations to the AI chipmaker, such as Strive U.S. Semiconductor ETF (SHOC), VanEck Vectors Semiconductor ETF (SMH), and Columbia Semiconductor and Technology ETF (SEMI).