Predicting Nvidia's Share Price Over the Next Year
Hopping on the Nvidia Rollercoaster in 2025: What's Going On?
Riding the wave with Nvidia (NVDA -3.31%) stock has been a thrill ride the last few years. But 2025's been a wild one, with shares taking a nosedive by as much as 20%. Here's a breakdown of the factors causing the turbulence—and whether Nvidia's still a good buy.
Nvidia's 2025 Bumpy Ride: A Closer Look
As the chart below illustrates, it's been a bumpy 2025 for Nvidia investors.
NVDA data by YCharts
Trouble started around late January, when Chinese start-up DeepSeek made waves by reporting it built and trained its artificial intelligence (AI) models on older Nvidia chipware. This questionable claim raised doubts about the viability of the company's newer architectures. Fueling the panic, some investors started selling off their Nvidia stock. But Wall Street analysts and leading AI researchers did some digging and found that DeepSeek likely spent significantly more on its AI model than initially reported.
Moreover, big tech players like Amazon, Microsoft, Alphabet, and Meta Platforms doubled down on their AI infrastructure plans amid the DeepSeek drama. These companies are forecasted to splash more than $320 billion on chipware, data centers, and more in 2025 alone. This was a bullish signal for Nvidia, as all these players work closely with the company.
However, shares took another hit during the latter portion of February, a trend that's carried into March. The reason? Big tech companies might be looking into developing custom silicon chips. Adding more chipware to the market could put a squeeze on Nvidia in the future, particularly in terms of pricing. If these tech giants begin to complement Nvidia's infrastructure with their custom chips, it's reasonable to think Nvidia's growth will start slowing.
But perhaps the most recent setback for Nvidia can be attributed to new tariff policies from the White House. There's a lot of uncertainty surrounding these tariffs, but investors have been selling off growth stocks in general—and Nvidia isn't an exception.
Nvidia's Business Remains Solid
Despite the various triggers for Nvidia's stock sell-offs this year, deep-dive analysis shows that most are driven by speculative narratives rather than concrete risks that threaten Nvidia's future.
Looking at the company's underlying business, it's in excellent shape. During the fourth fiscal quarter, Nvidia's new Blackwell GPU architecture generated a whopping $11 billion in sales—its first full quarter in operation. Adding to that impressive feat, Nvidia boasted a staggering 70% gross margin even after investing heavily in the Blackwell launch. The company is even aiming to return gross margin to the mid-70s later this year.
Nvidia's Future Outlook: A Closer Look
The DeepSeek concerns appear to have subsided, while custom silicon developments and tariff policies are tough to predict. But here's the thing: Nvidia's Blackwell results speak for themselves. If big tech moves away from Nvidia chipsets, there's still demand for Blackwell, based on its outstanding performance.
As for the ongoing trade disputes, they're likely temporary. The current administration will eventually reach trade agreements that they find reasonable, which should reinvigorate the market.
All signs point to a rebound for Nvidia stock in the coming year. Now is a prime opportunity to buy Nvidia shares at a discounted price—if you're willing to ride the rollercoaster.
Enrichment Data:Overall:
Current Factors Influencing Nvidia (NVDA) Stock Sell-Off in 2025
- DeepSeek Concerns: Questions around the effectiveness of Nvidia's GPUs were raised when Chinese startup DeepSeek built and trained AI models on older chipware. However, analysts and experts have deemed these concerns less significant as it was revealed that DeepSeek likely spent more on its AI model than reported.
- Custom Silicon Developments: Tech giants like Amazon, Microsoft, Alphabet, and Meta are developing custom silicon chips. This trend could pose a threat to Nvidia's future growth and pricing strategy.
- Tariffs and Trade Policies: New tariff policies announced by the U.S. administration have added uncertainty and led to a broader sell-off in growth stocks, including Nvidia.
Is Nvidia a Good Buy Despite Recent Drops?Despite the recent sell-off, Nvidia's underlying business remains robust. The company's new Blackwell GPU architecture has demonstrated remarkable sales figures, and its gross margin remains impressive. Nvidia is also predicted to hold its GPU Technology Conference (GTC), where new AI hardware and software announcements could drive investor confidence.
Arguments For Buying Nvidia:- Strong Business Fundamentals: Nvidia has maintained a solid track record of innovation and holds a strong market position in the AI chip industry.- Growth Potential: Despite short-term fluctuations, Nvidia's growth potential in the AI sector remains high in the long run.- Positive Catalysts: Events like the GTC conference could provide positive news that could reverse the downward trend of Nvidia's stock.
Arguments Against Buying Nvidia:- Market Volatility: The tech sector faces uncertainty, including economic concerns and competition from custom silicon developments.- Valuation Risks: There's a possibility that Nvidia's stock might face further valuation adjustments due to changes in AI demand and global economic conditions.
Overall, Nvidia remains a good buy for long-term investors who believe in its strong market position and growth potential in AI. However, short-term traders should exercise caution due to market volatility.
- Investors looking to leverage the Nvidia rollercoaster in 2025 might find a good buying opportunity as the stock has experienced a significant sell-off, particularly in February and March.
- The main factors causing the drop in Nvidia's stock price include concerns over DeepSeek's use of older chipware, the development of custom silicon chips by big tech companies, and uncertain tariff policies.
- However, deep-dive analysis shows that most of these factors are based on speculative narratives rather than concrete risks to Nvidia's future.
- Despite these challenges, Nvidia's business remains solid, with the new Blackwell GPU architecture generating impressive sales and a high gross margin. Additionally, the company is forecasted to return gross margin to the mid-70s later this year.
