Nvidia's stock continues to struggle, reflecting broader economic concerns and investor sentiment. On March 10, 2025, shares of Nvidia (NVDA) dropped 1.9% during premarket trading, reaching $110.59, contributing to its alarming 16% decline year-to-date. This downturn marks the company's worst performance since 2022 when it faced similar troubles. Despite the company's strong fundamentals and affirming signs of demand for its artificial intelligence (AI) chips, investor apprehension surrounding the U.S. economy and potential recession looms large over Nvidia's prospects.
Investor confidence has been marred by market uncertainties, particularly due to comments made by former President Donald Trump over the past weekend. Trump did not rule out the possibility of the U.S. facing economic recession this year, prompting fears among investors. Consequently, the overall market sentiment turned negative, as evidenced by S&P 500 futures which dropped by 1.1% on the same day as Nvidia's stock decline.
Despite these challenges, indications of strong demand for AI infrastructure remain apparent. Taiwan Semiconductor Manufacturing Company (TSMC), responsible for the manufacturing of Nvidia's chips, reported impressive sales growth of 43% year-over-year for February. Analysts note these figures should serve as good news for Nvidia, yet they are not enough to stem fears about the market.
Adding to the positive outlook, Foxconn—a prominent technology manufacturer—announced collaboration with Nvidia to develop its own AI model, dubbed the FoxBrain AI. Nvidia supported this venture through its Taiwan-based supercomputer and technical consulting services. This alignment signals persistent interest and investment from major companies leaning on Nvidia’s technology even amid the potential market slump.
A significant highlight for Nvidia is its alliance with OpenAI and Oracle, noted on March 6, 2025. The two companies plan to install 64,000 of Nvidia's advanced GB200 chips as part of the ambitious $100 billion Stargate infrastructure project, which involves the development of data centers across the U.S. Each chip ranges from $60,000 to $70,000, underscoring the substantial revenue potential for Nvidia stemming from this collaboration. An OpenAI representative commented on the commitment to work closely with Oracle to manage the supercomputer once the data center is fully operational.
Melius Research’s Ben Reitzes expressed optimism about Nvidia, maintaining his Buy rating on the stock even as he adjusted the two-year price target downward to $170 from $195. Reitzes commented, “At this point, we believe Nvidia and several others in the AI semis and hardware space are on sale and good buys right now.” His comments reflect recognition of Nvidia’s intrinsic value amid external pressures.
Nvidia is poised to provide more insight at its upcoming GPU Technology Conference, scheduled for March 18, where CEO Jensen Huang is expected to deliver the keynote speech. Analysts anticipate Nvidia will roll out its roadmap for future GPU innovations, which might include exciting developments such as the "Blackwell Ultra" and its GB300 system, along with the "Rubin" GPU slated for 2026, and the Arm-based CPU called "Vera." These announcements could prove pivotal for Nvidia as it pushes to retain its market leader status.
The fluctuations within Nvidia’s stock prices can be understood against the backdrop of global AI growth and infrastructure spending. Analysts have noted recent trends indicating increasing investment from major tech players aimed at enhancing AI capabilities. Meta Platforms, for example, expects to spend approximately $65 billion on capital expenditures to expand its AI infrastructure throughout 2025. Simultaneously, firms like OpenAI and Softbank are mobilizing funding as part of their commitment to various AI projects. The growth seen within AI data centers, which are fundamentally dependent on Nvidia’s hardware, shows no signs of quelling, even as other segments face volatility.
Market analysts have suggested the present decline might present buying opportunities for long-term investors considering Nvidia. With roughly 90% market share for graphics processing units (GPUs), Nvidia stands as the bedrock for AI-driven applications. Recent reports have highlighted remarkable demands for GPU clusters necessary for developing AI models, showcasing the surge of computational power required for subsequent AI iterations. For businesses like Meta, every iteration of their achieving AI models has necessitated significantly more GPUs, reflecting the thriving market for Nvidia’s chips.
While Nvidia struggles with immediate stock declines, its long-term outlook appears promising, driven by increasing AI demand and its technological advancements. Nonetheless, investor digressions may create occasional fluctuations as market conditions continue to develop.