Here are the Top Reasons NVIDIA Stock is Nearing a Bear Market

Key Insights

• NVIDIA stock price has dropped recently and is nearing a bear market.
• The decline was caused by the ongoing concerns about shipments of H200 chips to China.
• There are also concerns about its circular investments in companies in the AI industry.

NVIDIA stock price is sliding towards a bear market after falling by nearly 20% from its highest level in 2025. It was trading at $174, down from the all-time high of $212, with its market capitalization falling from over $5 trillion to $4.2 trillion.

NVIDIA Stock Price Has Dropped as Investors Rotate From Growth to Value

One major reason why the NVDA stock price is nearing a bear market is that investors are moving from growth companies to value ones.

A closer look shows that the tech-heavy Nasdaq 100 Index has dropped to $25,000, down from the all-time high $26,215. In contrast, other assets tracking valid stocks have soared.

For example, the Vanguard Value ETF (VTV) and the Schwab US Dividend Equity ETF (SCHD) have jumped by double digits and are now hovering at their all-time highs.

Sector rotation is common in the stock market, especially when investors feel that one of them has become highly overvalued or when the narrative changes.

For example, the narrative has now changed from the artificial intelligence (AI) boom to the potential bursting of the AI bubble.

NVIDIA Is Still Not Able to Ship H200 Chips to China

The other key reason why the NVDIA stock price is nearing a technical bear market is China, the biggest market for semiconductors in the world.

Donald Trump signed an executive order allowing the company to sell H200 chips to China last year, following intense lobbying by Jensen Huang.

The US has been carrying out a security review before the chip sales started, with officials working to ensure that the chips don’t go to the Chinese military.

At the same time, China has put limits on the number of H200 chips that companies can buy. For example, Alibaba, ByteDance, and Tencent can only buy 400k chips from NVIDIA. Beijing hopes the quotas will help to boost local companies.

Therefore, NVIDIA stock price has retreated as investors remain concerned about the potential sales volume and when the approval process will end.

NVIDIA’s Biggest Clients are Building Their ASIC Chips

The NVDA stock price has also dropped as many of its largest customers begin developing their own chips, a move that may limit its future growth.

For example, Google is working on its Tensor Processing Unit (TPU), while Microsoft is building Maia. Amazon is working on Tranium chips while Meta Platforms has MTIA chips. OpenAI is working with Broadcom to build its chips.

These ASIC chips will likely disrupt NVIDIA’s business in the future. A good example of this is Apple, which abandoned Intel and built its own M-series chips. That transition was one of the top reasons behind Intel’s implosion.

Concerns About its Circular Investments

NVIDIA stock price has also dropped because of the rising concerns about its circular investments. This is a situation in which NVIDIA invests in an AI company, which then uses the funds to buy chips from NVIDIA.

For example, NVIDIA is considering investing $20 billion in OpenAI, which will then use the funds to buy NVIDIA chips. It also invested in CoreWeave, which has become a major buyer of its chips and Elon Musk’s xAI.

Therefore, the main concern is that the company is engineering demand and manipulating its stock price.

NVIDIA Share Price Technical Analysis

Technicals have also contributed to the ongoing NVIDIA stock price weakness. It has already flipped the Supertrend indicator from green to red and moved below the 50-day Exponential Moving Average.

The stock has also formed a head-and-shoulders and a double-top pattern, which are common bearish reversal signs in technical analysis.

Therefore, there is a likelihood that the stock will drop further in the coming weeks, potentially to the 50% Fibonacci Retracement level at $150.

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