Nvidia’s stock price continued its downward trajectory on Monday, plummeting as much as 8% to $114.51, solidifying its bear market status. This decline comes amid concerns surrounding the company’s Q4 earnings, profit margin expectations, and reports of its AI chips circumventing export controls to reach the Chinese market.
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Nvidia stock chart showing a downward trend.
The chipmaker’s shares officially entered a bear market last week, having fallen more than 20% from their January peak. The recent sell-off has been particularly sharp, with an 18% drop in the past seven days alone, down from $140.11 on February 20th.
Q4 Earnings and Profit Margin Concerns
While Nvidia’s fourth-quarter earnings report surpassed analyst estimates and presented a positive outlook, it failed to meet the highest expectations on Wall Street, sparking anxieties about profit margins. This initial disappointment triggered the current wave of selling pressure. Investors are closely scrutinizing the company’s ability to maintain profitability in the face of increasing competition and potential supply chain disruptions.
A person working on a computer with Nvidia graphics card.
AI Chips Reaching China Despite Export Controls
Adding fuel to the fire, reports emerged on Monday suggesting that Nvidia’s AI chips are finding their way into China despite US export restrictions. The Wall Street Journal reported that Chinese tech firms are acquiring Nvidia’s Blackwell GPUs through intermediaries in countries like Malaysia, Vietnam, and Singapore. These chips are reportedly commanding exorbitant prices in the Chinese market, with a Blackwell server equipped with eight GPUs fetching over $600,000.
Bloomberg corroborated these reports, revealing that Singapore has initiated a fraud investigation into potential violations of export controls involving Nvidia chips shipped from Dell Technologies and Super Micro Computer to Malaysia. These investigations underscore the challenges in enforcing export restrictions and the potential for unauthorized access to sensitive technologies.
Technical Analysis Signals Further Weakness
From a technical perspective, Nvidia’s stock is exhibiting concerning signals. The shares failed to break through a key resistance level at around $130 and are currently trading below both the 50-day and 200-day moving averages, indicating potential for further downside.
Stock market data displayed on multiple screens.
In conclusion, Nvidia’s stock is facing significant headwinds stemming from concerns about profit margins and potential breaches of export controls. The recent price action, coupled with negative technical indicators, suggests that the stock may experience further declines in the near term. Investors should carefully monitor these developments and assess the potential risks before making any investment decisions.
