The U.S. stock market’s performance in recent weeks has primarily been volatile, yet with a decided bearish note.
This state is well-exemplified by the fact that the Magnificent 7 companies – the seven dominant S&P 500 technology firms – enjoyed a resurgence after March 20 only to, in the initial hours of the March 26 session, become the index’s loss leaders.
Nvidia (NASDAQ: NVDA) shares are, at press time, arguably the most concerning of the day’s losers. The semiconductor giant has, in recent months, become highly influential for the other major stocks as it saw its market capitalization balloon to the tune of trillions of dollars.
Magnificent 7 rally suddenly breaks on Wednesday
On March 26, NVDA equity saw the biggest early trading drop as it collapsed 5.58% and is changing hands at $113.96.
The price collapse, paired with Nvidia stock’s other recent woes and the overall state of the U.S. market, once again raised the question of whether the blue-chip chipmaker will finally slide below $100 this week.
To begin with, while historical performance has shown NVDA shares to be resilient and able to remain above $100 – or to rebound quickly, as was the case in August 2024 – external pressures might finally collapse the previous support levels.
Why Nvidia stock is poised to collapse below $100
In January, DeepSeek’s R1 model cast doubt on the vast expenditure made on artificial intelligence (AI) infrastructure, while Alibaba’s (NYSE: BABA) Qwen 2.5 model demonstrated China would be, at the very least, a close competitor in the AI race.
In February, President Donald Trump’s escalating trade war started taking a major toll, including on the technology sector due to its relatively oversized dependence on international supply chains. This war inaugurated the prevailing recessionary fears.
In March, just as the stock market appeared to be getting used to competition, tariff instability, and resurgent inflation, new pressures began rapidly emerging.
As Finbold reported on March 25, Alibaba Chairman Joe Tsai opined that the global data center infrastructure buildup – a major source of revenue for Nvidia – may have already become a bubble.
The warning was seemingly confirmed on March 26, when Bloomberg reported that Microsoft (NASDAQ: MSFT) – another major player in the AI boom – is abandoning some of its data center projects in the U.S. and Europe due to similar concerns about a developing bubble.
Lastly, Nvidia received bad news from China, one of its major customers, as new environmental regulations in the country may effectively ban many of the company’s most lucrative chips.
Featured image via Shutterstock
