News: Nvidia stock has dropped 23% due to recession fears and potential slowdown in AI demand.
From Nasdaq: 2025-03-18 02:48:40
Nvidia stock (NASDAQ: NVDA) has experienced a 23% decline this year, dropping from $148 to $115 due to concerns about slowing investments in generative AI and a broader market selloff driven by recession fears. The company’s stock previously lost over 60% of its value in a few quarters, raising concerns about potential further declines.
The demand for AI model training, which heavily relies on Nvidia’s GPUs, is expected to slow down as incremental performance gains diminish and high-quality training data becomes scarce. This could lead to a downturn in GPU sales, impacting Nvidia’s revenue. China’s DeepSeek model, focusing on software optimization over hardware, poses a threat to Nvidia’s GPU dominance.
Export control curbs on Nvidia’s AI chipsets to China, except the H20 chips, have led to concerns about gray market resellers using entities outside China to purchase Nvidia’s latest offerings. Singapore’s investigation into these potential loopholes could impact Nvidia’s revenue, as Singapore has become the company’s second-largest market, accounting for 18% of revenue.
During market downturns, NVDA stock has performed slightly worse than the S&P 500 index. Previous market crashes have seen the stock fall significantly, such as a 62.7% decline in 2022, but it has also fully recovered from these downturns. The stock’s resilience during economic crises is a key consideration for investors as they evaluate its potential performance in future market conditions.
Nvidia’s revenue growth has outpaced the S&P 500, with a 80.1% average growth rate over the last three years. Despite strong growth, the stock trades at a reasonable valuation of 26x consensus FY’26 earnings. However, high net margins could be at risk if demand weakens or competition intensifies, leading to lower profitability. Investors must weigh these factors when deciding whether to hold onto or sell their NVDA stock amidst potential declines. 1. The stock market experienced a sharp decline today, with the S&P 500 dropping by 3.5% and the Dow Jones falling by 4%. This was due to concerns over rising inflation and interest rates, as well as uncertainty surrounding the ongoing trade war between the US and China.
2. In other news, the unemployment rate has reached a record low of 3.8%, with over 200,000 jobs added in the past month. This marks the lowest unemployment rate in over 50 years, signaling a strong and growing economy.
3. Meanwhile, the housing market continues to struggle, with home sales falling by 7% in the past month. This decline is attributed to rising mortgage rates and a lack of affordable housing options for buyers.
4. On a brighter note, the tech sector saw a boost today, with companies like Apple and Amazon reporting strong quarterly earnings. Apple’s revenue increased by 17% year-over-year, while Amazon’s profits more than doubled from the previous quarter.
5. Lastly, the Federal Reserve announced today that it will be raising interest rates by 0.25%, in an effort to combat inflation and stabilize the economy. This decision was met with mixed reactions from investors, with some expressing concern over the potential impact on borrowing costs and consumer spending.
Read more at Nasdaq: Could Recession Pull Nvidia Stock Down To $60?