Nvidia’s stock has plummeted approximately 20% from its all-time high of $132.80 reached in February. The selloff intensified after fourth-quarter earnings revealed declining gross margins, which dropped three points to 73%. Management expects margins to fall further to 71% in Q1. Investor concerns have grown amid challenges with Blackwell chip rollout and reports of Microsoft canceling data center leases. The trillion-dollar revenue projection now faces heightened scrutiny as market sentiment shifts.
Nvidia’s stock has fallen sharply, dropping about 20% from its all-time high and erasing billions in market value. The tech giant’s shares closed at $111.61 on May 1, 2025, continuing a downward trend seen in recent trading sessions. This decline has brought Nvidia’s valuation to approximately 26 times forward earnings, a level considered low compared to its historical performance.
The selloff intensified in late February when shares plunged 14% following the company’s earnings release. Investors were concerned about a three-point drop in fourth-quarter gross margins to 73%, with management projecting a further decline to 71% in the first quarter. These margin pressures coincide with challenges in the rollout of Nvidia’s new Blackwell chips.
Market sentiment has soured despite Nvidia’s impressive growth rate. Some analysts point to potential demand issues in the AI sector, with reports that Microsoft, one of Nvidia’s largest customers, has canceled some data center leases in the United States. Microsoft’s CEO has publicly questioned whether AI is creating meaningful value yet, potentially signaling broader industry concerns. This uncertainty exists despite research indicating 70% of businesses are reporting returns on their generative AI investments.
AI sector’s growth trajectory falters as Microsoft cancels data center leases and questions AI’s real-world value.
Nvidia’s lofty $1 trillion revenue projection now faces increased scrutiny. Analysts suggest that data center growth rates will be a key metric to watch in 2025, with rates around 70% indicating the company might miss its ambitious target. CEO Jensen Huang remains confident that the data center TAM will exceed $1 trillion by 2028. Even at 80-90% growth, achieving the trillion-dollar goal remains challenging.
Technical analysts have identified $111.47 to $111.85 as a key resistance zone for the stock. The price has repeatedly tested these levels after breaking below a 9-month channel bottom about five weeks ago. Historical data shows the stock traded as high as $132.80 in February before beginning its consistent downward trajectory.
Despite the current downturn, some market observers believe demand for GPUs will remain strong as AI development continues. Major tech companies are still investing heavily in AI infrastructure.
While Nvidia’s stock has suffered a significant setback, the company’s growth trajectory remains substantially stronger than many tech peers, even if it falls short of its most ambitious projections.
