Nvidia (NVDA) is facing a turbulent start to 2025, as its stock continues to decline, losing another 3% in Monday’s trading session. This downturn places the company near correction territory after a cumulative 10% drop, sparking concerns among Wall Street analysts about a potential reversal in the stock’s momentum, which had been strong in late 2024.
Tech Market Under Pressure
Nvidia and the broader tech market are under significant strain as 2025 begins. Rising Treasury yields and the U.S. government’s new export restrictions on AI technologies are weighing heavily on investor confidence in tech and AI stocks.
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New AI Export Restrictions
The Biden administration has introduced rules restricting the export of AI technology to countries like Israel, Singapore, Saudi Arabia, and the UAE, in addition to existing bans on exports to China and Russia. Commerce Secretary Gina Raimondo emphasized that the restrictions aim to preserve U.S. dominance in AI and chip development. However, Nvidia, which generates 15% of its revenue from Taiwan and China, strongly opposed the move, citing its critical operations in Asia.
Nvidia’s Market Leadership and Growth
Despite recent challenges, Nvidia has solidified its position as a tech leader, becoming a member of the Magnificent-7 stocks. Over the past five years, its stock has soared by 2,130.85%, significantly outpacing other members of the group. Only Tesla (TSLA) has seen comparable growth, though still nearly 1,000% lower than Nvidia’s rise.
Revised Analyst Predictions
The new restrictions have led some analysts to adjust their bullish forecasts. HSBC analyst Frank Lee reduced his price target for Nvidia to $185 per share while maintaining a ‘buy’ rating. He cited potential headwinds in the first half of Nvidia’s fiscal year, which begins in February, but remains optimistic about a stronger second half. Lee also revised his projections for Nvidia’s data center revenue to $236 billion (down from $253 billion) and lowered sales estimates for the NVL 72 AI server racks to 220,000 units. Nevertheless, he expects Nvidia to outperform earnings per share even in a bearish scenario.
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Investor Sentiment and Future Outlook
Retail and institutional investors have continued to accumulate Nvidia stock, maintaining strong buying pressure despite recent price declines. With minimal dips on the charts, Nvidia’s stock resilience is evident. Analysts suggest it would take significant external pressures, such as potential policies from the incoming Trump administration, to drive a deeper dip in Nvidia’s valuation—a scenario considered unlikely at this time.
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