It has been a crazy start to the year for Nvidia (NASDAQ:NVDA) stock for multiple reasons. If investors had put £10k in the stock at the beginning of January, they would likely have felt confident that the sharp share price appreciation from the past year could continue. Reality doesn’t always play out that way, with some events hitting a stock hard out of nowhere.
In the red
Nvidia shares started the year just above $134, and it is currently at $120. This reflects a 10.6% fall over the space of just under three months. This means the £10k would currently be worth £8,940. Even with this, the share price is still up 32% over the last year.
At the end of January, the stock fell following the breaking news about DeepSeek. The AI model out of China caught headlines due to the reported low cost needed to build and train it. As a result, AI-related shares like Nvidia dipped lower, with investors concerned about the sky-high valuations previously being factored in.
After this move, another hit came later in February, when President Trump started making tariff threats. Nvidia has global exposure in terms of manufacturing and sales, so any tariffs with Mexico, Canada, China, or the EU would negatively impact operations. Even though nothing material has come into effect right now, the uncertainty around tariffs was enough to spook some investors.
Points to consider
Even though the unrealised loss in a short space of time isn’t great, it’s important to consider this relative to other benchmarks. For example, the Nasdaq index is down 8% over the same period. Fellow big tech names like Apple (down 13.8%) and Microsoft (down 8%) can also be used as barometers. When I look at this all together, I can see that Nvidia’s performance is broadly in line with the rest of the market.
Of course, no one can predict what will happen with tariffs, and I see this as a company-specific risk for Nvidia going forward. Rising competition in the sector is another concern some might have.
When I consider where things could go from here, it’s key to remember what caused the long-term rally in Nvidia shares to begin a couple of years back. It was the fact that it was at the front of AI innovation and development. I’d argue that this is still the case. The adoption of products and software still isn’t that high, with developments in the sector happening at a rapid pace.
I feel this means that the fall in the past couple of months is more of a blip rather than the end of the story. There’s a lot of potential for the company to still grow and deliver high profits for shareholders. So when I look at it with a long-term lens, I believe the stock is worth considering.
