Nvidia (NASDAQ: NVDA) has experienced a sharp downturn, falling 27% from its January high of $148, extending its year-to-date decline to 19%.
The drop has wiped out a significant chunk of its AI-driven gains from the past year, raising concerns over whether the pullback signals a compelling buying opportunity or a sign of prolonged weakness.
As of the latest trading session, Nvidia closed at $108.76, gaining 1.6% on the day. However, the stock remains under pressure, down nearly 7% for the week and 17% over the past month.
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NVDA weak gross margin forecast sparks selloff
Despite delivering a strong fiscal fourth-quarter performance, Nvidia’s stock came under pressure.
The company reported $39.33 billion in revenue and an adjusted EPS of $0.89, surpassing analyst expectations of $38.05 billion in revenue and $0.84 EPS. The company also projected a strong Q1 revenue of $43 billion, outpacing the $42.3 billion consensus forecast.
However, investor sentiment soured when Nvidia issued a weaker-than-expected gross margin forecast of 71%, falling short of Wall Street’s 72.1% target.
This disappointment triggered an 8.5% single-day selloff on February 27, Nvidia’s steepest decline in over a month, erasing nearly $250 billion from its market cap and pushing it below the $3 trillion threshold.
Geopolitical headwinds add to uncertainty
Beyond earnings, Nvidia faces significant geopolitical and regulatory risks that could impact its long-term growth. One of the biggest concerns is U.S. export restrictions on high-performance AI chips, potentially limiting sales to China, which contributed 13% of Nvidia’s fiscal 2025 revenue.
Moreover, Trump’s proposed tariffs on semiconductor imports from Taiwan, where Nvidia manufactures its most advanced chips, could drive up costs and cause supply chain disruptions, further fueling investor uncertainty.
These growing uncertainties have weighed heavily on investor sentiment, raising fresh concerns about Nvidia’s long-term profitability.
NVDA’s fundamentals remain strong
Despite the short-term setbacks, Nvidia’s fundamentals remain strong. Nvidia’s Data Center segment, now contributing 91% of total sales, delivered $35.6 billion in revenue, marking a 93% year-over-year surge.
The growth was fueled by Blackwell, Nvidia’s next-generation AI chip, which generated $11 billion in revenue and is seeing the fastest adoption rate in the company’s history.
Nvidia remains at the core of the AI infrastructure boom, with Amazon (NASDAQ: AMZN) and Meta (NASDAQ: META) ramping up AI investments to $100 billion and $60 to $65 billion, respectively.
As two of Nvidia’s biggest customers, investors are factoring this surge in capital expenditures into their expectations for the company, which still dominates the AI chip market with a 70 to 95% share. Beyond AI chips, Nvidia is also expanding into robotics and healthcare AI, broadening its foothold in high-growth sectors.
Technical analysis hints at a rebound
From a technical perspective, Nvidia has been trading within a nine-month “Channel Up” pattern, according to trading expert TradingShot. The recent correction represents the bearish leg of this pattern, and the stock has now reached the bottom trendline, indicating a potential rebound.
Moreover, the stock’s one-day RSI is at 34, a level that has marked strong rebounds over the past 11 months. Each time NVDA’s RSI hit this range, the stock rebounded by at least 26.85%.
If this pattern holds, Nvidia’s medium-term target is projected at $164, aligning with the 1.236 Fibonacci extension, indicating a potential buying opportunity.
The verdict: Is NVDA stock a buy?
While Nvidia’s sharp correction has raised concerns, its strong fundamentals and long-term growth potential remain intact.
Nvidia’s upcoming GTC conference on March 17 will provide a deeper look into the company’s next phase of AI advancements, with discussions on new products like the Blackwell Ultra and Rubin chips potentially reigniting investor interest.
That being said, for long-term investors, this dip could present a strategic buying opportunity. However, those eyeing short-term gains should closely monitor technical levels and macroeconomic trends, which could keep the stock under pressure in the near term.
Featured image via Shutterstock
