nvidia stock decline reasons march 2025

Reasons for NVIDIA's Stock Decline in March 2025

The decline in NVIDIA's stock price in March 2025 resulted from a combination of factors, which can be summarized as follows:

‌1. Technical and Product Factors‌

• ‌H20 Chip Facing Purchase Restrictions in China‌
  Stricter compliance requirements from China’s National Development and Reform Commission (NDRC) on AI chips raised concerns about the competitiveness of NVIDIA’s H20 chip. While compliant with U.S. export controls, the H20’s performance failed to meet China’s updated standards, jeopardizing its $17 billion annual revenue in the Chinese market.
• ‌Weak Next-Generation Product Expectations‌
  The Rubin architecture chips announced at GTC 2025, scheduled for release in 2026, lacked groundbreaking innovations. Investors grew skeptical about short-term profitability due to uncertainties in transitioning from Blackwell Ultra to Rubin and potential production adjustments.

‌2. Shifts in Competitive Landscape‌

• ‌Low-Cost Alternatives Gaining Traction‌
  Chinese firm DeepSeek’s R1 model reduced hardware costs by 70% while tripling computing efficiency, undermining NVIDIA’s pricing power for high-end GPUs. Meanwhile, U.S.-based Cerebras’ WSE-3 chip outperformed NVIDIA’s solutions in inference speed by 70x at 10% of the cost.
• ‌Cloud Providers Developing In-House Chips‌
  Amazon, Google, and other cloud giants accelerated their in-house AI chip development, reducing reliance on NVIDIA and casting doubt on long-term demand for its products.

‌3. Supply Chain and Demand Volatility‌

• ‌Reduction in CoWoS Packaging Orders‌
  Anticipated CoWoS advanced packaging orders for 2025 were revised downward by 8–10%, signaling potential weakening demand despite NVIDIA attributing this to the Blackwell architecture transition.
• ‌Slowdown in Data Center Expansion‌
  Microsoft’s cancellation of a 2GW data center project and similar adjustments by Meta and Google suggested a broader slowdown in AI infrastructure investments, directly impacting NVIDIA’s revenue outlook.

‌4. Policy and Macroeconomic Pressures‌

• ‌Geopolitical and Tariff Risks‌
  U.S. tariffs on imports from Canada and Mexico raised production costs for NVIDIA’s Mexican facilities, while China’s intensified scrutiny of AI chip compliance further strained supply chain stability.
• ‌Economic Headwinds‌
  The Federal Reserve’s prolonged high-interest-rate policy, coupled with fears of stagflation and recession, triggered a sector-wide sell-off in tech stocks.

‌5. Market Sentiment and Capital Flows‌

• ‌Institutional Selling and Short Positions‌
  ARK Fund continues to reduce its holdings in Nvidia, with hedge fund net short positions increasing from $3.7 billion to $8.9 billion, suppressing bearish sentiment and limiting upward potential for stock prices
• ‌Slowing Financial Growth‌
  NVIDIA’s Q4 2025 revenue growth slowed to 78% (down from 94% in Q3), with data center revenue growth dropping to 93% and a 3% year-on-year decline in gross margins, raising concerns about sustainability.

  Will NVIDIA’s Stock Rebound in March 2025?

  The potential for a rebound hinges on several dynamics:

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  ‌1. Short-Term Catalysts‌

  • ‌Technical Rebound Signals‌
    A 6.43% single-day rally on March 13 hinted at bullish sentiment ahead of GTC 2025 (March 18), with investors betting on Blackwell updates.
  • ‌Policy Relief and Bargain Hunting‌
    The U.S. government’s temporary spending bill and tariff delays eased supply chain fears, while institutional buying in AI-related stocks fueled a 5% rebound on March 14.
  • ‌Blackwell Chip Progress‌
    Accelerated production of Blackwell GPUs could restore confidence in NVIDIA’s near-term growth.

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  ‌2. Risks Limiting Recovery‌

  • ‌Persistent Market Uncertainty‌
    Post-GTC price stagnation and Tesla’s underperformance raised fears of a broader market correction, with NVIDIA still down 0.59% by March 26.
  • ‌Competitive Threats‌
    Innovations like DeepSeek’s R1 and Cerebras’ WSE-3 eroded NVIDIA’s dominance, while reduced CoWoS orders signaled softening demand.

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  ‌3. Critical Milestones and Forecasts‌

  • ‌Volatility in Late March‌:
    NVIDIA’s stock hovered around $117.70onMarch24,withanalystspredictingarangeof$105–$138untilearlyApril,followedbyapotentialclimbto$128.
  • ‌Policy and Economic Data‌:
    The Fed’s dovish stance on tariffs provided temporary relief, but high rates continued to pressure tech valuations.
  • ‌Earnings Validation‌:
    Investors awaited Q4 2025 results to assess whether NVIDIA could reverse its slowing growth in data center and gross margins.

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  ‌Conclusion: Conditions for a Rebound‌

  A sustained recovery requires:

  1. ‌Blackwell Production Surpassing Expectations‌ to counter competition;
  2. ‌Stabilization in China’s H20 Sales‌ amid regulatory clarity;
  3. ‌Institutional Short Covering‌ and renewed capital inflows into AI stocks.

  If unmet, NVIDIA’s stock may remain range-bound ($105–$130) or face further downside from macro risks like stagflation.