Thanks to its leading role in the artificial intelligence (AI) boom, Nvidia (NASDAQ: NVDA) has enjoyed more than two years of incredible growth as the company added nearly $3 trillion in market capitalization in some 26 months.
Such a rise has, however, led to significant instability equally driven by the exceptionally high valuation, and stratospheric expectations.
In fact, the current dynamic received a clear example already in the initial days of 2025 as NVDA stock climbed to approximately $150 before plunging to its press time price of $131.79.
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The rapid drop raised the question of whether Nvidia shares – driven by a string of negative developments – are set for their first dip below $130 since the brief mid-December shock.
Why Nvidia stock price is falling
By press time on January 13, two main developments appear to be driving NVDA stock lower. In mid-December, the Federal Open Market Committee (FOMC) generated a broad stock and cryptocurrency market shock as it unveiled higher inflation expectations for 2025.
More recently, the Biden administration sent substantial headwinds in Nvidia’s direction as it revealed plans for greater chip export restrictions, allegedly to curb China’s efforts to bolster the People’s Liberation Army with AI.
Though the details of the rule are somewhat vague at press time – and despite the previous rounds of semiconductor controls proving less than damaging for Nvidia shares – the chipmaking giant fired back at the outgoing administration.
According to the company, the move would be a net negative for the U.S. as it would hamper the industry and seriously jeopardize America’s technological leadership without significantly slowing China or other international adversaries.
Indeed, Nvidia pointed out that much of the technology that the administration aims to restrict is already widely available in gaming and consumer hardware.
At press time, however, it remains somewhat unclear why hardware intended to run Counter-Strike can be used by China to counterstrike U.S. bases in the Pacific. Furthermore, it remains somewhat unclear why the Biden administration is seeking to restrict technology that is already widely available.
Will NVDA share price plunge below $130 this week?
Despite the adverse developments and the fears for Nvidia specifically and the economy more broadly, few appear to believe the downturn will persist.
For example, despite NVDA shares receiving a rare price target downgrade on Monday, the forecast was accompanied by a ‘buy’ rating. Furthermore, despite HSBC’s (NYSE: HSBC) Frank Lee lowering his prediction from $190 to $185, he still estimated a 40% rally in the coming 12 months.
Ultimately, though Nvidia’s stock may plunge below $130 given its recent performance, it appears unlikely that the shares will remain depressed in the long term.
Featured image via Shutterstock
