This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
It's been pretty hard to lose money investing in Nvidia (NASDAQ: NVDA) stock over the last few years. For the most part, any sell-offs witnessed in the stock were met with buyers eager to take advantage of depressed action -- thereby sending Nvidia stock right back up.
However, this year has been a little bit different. So far in 2025, shares of Nvidia have dropped by as much as 20%. While the stock has rebounded slightly, Nvidia stock is still down by about 9% this year.
Let's explore some of the core factors influencing the sell-off in Nvidia stock, and assess if shares are a good buy right now. Could Nvidia stock be headed even lower?
Nvidia stock has gotten off to a rough start in 2025, but...
As the chart below illustrates, 2025 hasn't been so kind to Nvidia investors.
Around late January, shares of Nvidia started to slide thanks to bombshell reporting that a Chinese start-up called DeepSeek built and trained its artificial intelligence (AI) models on older Nvidia chipware -- calling into question the viability of the company's newest architectures.
Concerns around DeepSeek's claims inspired a brief period of panic-selling in Nvidia stock. However, many analysts on Wall Street and leading AI researchers curtailed these concerns after digging deeper into the DeepSeek storyline. The consensus among experts was that DeepSeek likely spent significantly more on its AI model than initially reported.
Moreover, cloud hyperscalers Amazon, Microsoft, and Alphabet, as well as social media leader Meta Platforms, all doubled down on the AI infrastructure plans in the midst of the DeepSeek saga. Specifically, these companies are forecast to spend more than $320 billion on chipware, data centers, and more just in 2025.
As the chart above shows, Nvidia stock started to rebound during the early parts of February -- once the spending plans from big tech became more public. Considering each of the companies I referenced above works with Nvidia, investors initially started to shake off the DeepSeek narrative and buy back into the bull case around Nvidia.
With that said, shares took yet another nosedive during the latter portion of February -- a trend that's continued well into March. While Nvidia's biggest customers are indeed planning to invest heavily into AI infrastructure this year, not all of that is going to be allocated toward the company. Amazon, Microsoft, Alphabet, Meta, and even OpenAI are all exploring the development of custom silicon chips.
Bringing more chipware to the GPU market could put pressure on Nvidia in the future, especially as it relates to price. Furthermore, should big tech companies begin to complement existing Nvidia infrastructure with their own custom chips, it's reasonable to think Nvidia's growth will begin to slow.
Lastly, the most recent dip in Nvidia stock can likely be traced to new tariff policies out of the White House. While there are a lot of unknowns around the specifics of these tariffs and how they might influence trade, investors have been largely selling out of growth stocks over the last couple of weeks -- and Nvidia has been no exception.
... the business is still in great shape
Although each sell-off in Nvidia stock this year has had a different trigger, the DeepSeek story, rising investment in custom silicon, and the impacts of tariffs share a common theme -- namely, each is a speculative narrative rather than a concrete, definitive risk that will alter Nvidia's future.
If you look at Nvidia's underlying business, it's actually in terrific shape. During the company's fourth fiscal quarter, its new Blackwell GPU architecture generated $11 billion in sales. That's not too shabby for its first full quarter in business.
On top of that, Nvidia boasted that its gross margin remained well above 70% despite aggressive development for the Blackwell launch. What's even more encouraging is that management is guiding for gross margin to return to the mid-70s later this year -- indicating that Nvidia should still command high degrees of operating leverage as Blackwell becomes a more critical component to the company's growth.
My prediction for Nvidia stock one year from now
As far as I can tell, the DeepSeek concerns have already subsided. While big tech will likely tout breakthroughs in their own custom chipware, I think Nvidia's Blackwell results speak for themselves. What I mean by that is if big tech does in fact migrate away from Nvidia chipsets, the company's current results and future guidance indicate that demand for Blackwell remains strong anyway.
In addition, I do not think ongoing disputes over tariffs are going to last very long. Eventually, I think the current administration will reach trade agreements that it finds reasonable; the markets should begin to see some new life should that occur.
My prediction is that Nvidia stock will rebound in spectacular fashion and be trading at a much higher price one year from now compared to where it is today. Until then, I think now looks like a great opportunity to take advantage of the depressed price action and scoop up shares of Nvidia at a rarely discounted price point.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
