NVIDIA Stock Can Sink, Here Is How
NVIDIA (NVDA) has stumbled before. Its stock has plunged more than 30% within a span of less than 2 months on as many as 8 different occasions in recent years, wiping out billions in market value, and erasing massive gains in a single correction. If history is any guide, NVDA stock isn’t immune to sudden, sharp declines.
NVIDIA’s meteoric ascent, powered by its unparalleled AI chip dominance and the wildly successful Blackwell platform, has seen the stock surge over 37% in the past year. Yet, this very triumph invites vulnerability; intensifying competition from rivals and hyperscalers crafting proprietary silicon, alongside persistent US-China trade tensions and regulatory probes, could temper its soaring trajectory, making continued exponential growth a delicate balancing act.
What Could Send The Stock Crashing?
- China Export Ban: US restrictions tightened in 2025, blocking H20 chip sales, causing a $5.5B charge. China’s $50B AI market is largely closed, spurring local rivals like Huawei. NVIDIA focuses on other markets.
- Hyperscaler Chips: Major customers (Google, Amazon) increasingly develop custom AI chips, like Ironwood TPUs, to reduce NVIDIA reliance, impacting data center revenue. NVIDIA counters with NVLink Fusion for semi-custom solutions.
- Rival Chip Gains: AMD (MI350X, projected $5.6B AI chip revenue in 2025) and Intel (Gaudi 3) challenge NVIDIA’s 80% market share, increasing pricing pressure. NVIDIA leverages CUDA and new Blackwell chips.
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What’s The Worst That Could Happen?
Looking at NVIDIA’s history during market downturns shows there’s still plenty of risk despite its strengths. The stock fell about 85% in the Global Financial Crisis and 68% in the Dot-Com crash. The 2018 sell-off and inflation shock each saw declines north of 55%, with the latter around 66%. Even the Covid dip, which was relatively brief, pulled the stock down nearly 38%. Solid fundamentals matter, but when the market turns, NVDA isn’t immune to sharp drops.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read NVDA Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Is Risk Showing Up In The Company’s Financials Yet?
Let’s take a look at fundamentals
- Revenue Growth: 71.6% LTM and 92.0% last 3-year average.
- Cash Generation: Nearly 43.6% free cash flow margin and 58.1% operating margin LTM.
- Valuation: NVIDIA stock trades at a P/E multiple of 53.5
| NVDA | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductors | – |
| PE Ratio | 53.5 | 23.4 |
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| LTM* Revenue Growth | 71.6% | 6.1% |
| 3Y Average Annual Revenue Growth | 92.0% | 5.4% |
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| LTM* Operating Margin | 58.1% | 18.8% |
| 3Y Average Operating Margin | 51.0% | 18.2% |
| LTM* Free Cash Flow Margin | 43.6% | 13.5% |
*LTM: Last Twelve Months
If you want more details, read Buy or Sell NVDA Stock.
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