NVIDIA Shares Plunge 14.7% – Is It Time to Sell Before It’s Too Late?
Shares of NVIDIA (NASDAQ: NVDA) fell sharply on Monday, dropping 14.7% to as low as $121.62 during midday trading. The stock, which had previously closed at $142.62, saw a significant increase in volume, with 284,055,362 shares changing hands—27% higher than the average daily volume of 222,855,219 shares.
The sudden plunge has raised questions about the future of the company and its stock performance. While several analysts have recently weighed in on NVIDIA’s prospects, the latest developments have left investors wondering whether it’s time to sell.
Analyst Opinions on NVIDIA Stock
NVIDIA's stock has been subject to a range of opinions from financial analysts. Bank of America maintained a "buy" rating with a price target of $190.00 in its research note on November 21st. Similarly, Piper Sandler raised its price target for NVIDIA to $175.00, upgrading the company to "overweight" on November 11th. UBS Group also increased its price target from $150.00 to $185.00 on the same day, giving the stock a "buy" rating.
However, the latest change in NVIDIA’s stock price comes as concerns mount over new competition emerging from China. On January 13th, HSBC reduced its price target for NVIDIA from $195.00 to $185.00, while still maintaining a "buy" rating. Despite these varying opinions, the consensus rating for the company remains “Moderate Buy,” with a target price of $165.23 according to MarketBeat.
Can DeepSeek Challenge NVIDIA’s AI Dominance?
The significant drop in NVIDIA’s stock price has sparked further questions about the potential challenge to its market dominance in AI. With a new player from China, DeepSeek, unveiling a large language model capable of rivaling U.S. firms at potentially a lower cost, NVIDIA’s reign as the leader in AI technology could be under threat.
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Despite U.S. government restrictions on Chinese access to top-tier AI chips, DeepSeek's breakthrough has created a ripple effect in the market. The company’s large language model quickly surged to the top of Apple’s App Store free apps chart, raising concerns about the future competitiveness of major U.S. AI companies, including NVIDIA.
Dan Ives, an analyst with Wedbush Securities, commented, “It remains to be seen if DeepSeek found a way to work around these chip restrictions rules and what chips they ultimately used as there will be many skeptics around this issue given the information is coming from China.”
NVIDIA’s Financial Performance
NVIDIA reported impressive earnings for the quarter ending November 20th. The company posted earnings of $0.81 per share, surpassing analysts' expectations of $0.69. Revenue for the quarter came in at $35.08 billion, exceeding the consensus estimate of $33.15 billion. Year-over-year, NVIDIA’s revenue was up a staggering 93.6%.
However, the company’s performance in the stock market has been volatile. Its market capitalisation currently stands at $2.91 trillion, with a P/E ratio of 46.97 and a beta of 1.64, indicating substantial risk and market sensitivity. Analysts predict that NVIDIA will post earnings of 2.78 per share for the current year.
Insider Activity and Hedge Fund Moves
NVIDIA has also seen significant insider activity. On December 13th, insider Donald F. Robertson Jr. sold 4,500 shares of NVIDIA stock at an average price of $135.28, totalling approximately $608,760. Additionally, director John Dabiri sold 716 shares on November 25th, valued at around $101,672. Over the past 90 days, insiders have sold a total of 1,108,348 shares, worth $146.5 million.
Institutional investors have also been adjusting their positions. The University of Texas Texas AM Investment Management Co. increased its stake in NVIDIA by 897.5%, while Truepoint Inc. lifted its holdings by 914.1% during Q2. Meanwhile, other hedge funds, including Westwood Holdings Group and Palisade Asset Management, have also expanded their positions in the company.
Should You Sell?
Despite the recent drop in NVIDIA’s stock price, analysts continue to rate the company positively, with a "Moderate Buy" rating overall. However, the rise of new competitors in the AI space, like DeepSeek, combined with insider sales and market uncertainty, could signal a shift for the company. Investors will need to weigh these factors carefully when deciding whether to hold or sell NVIDIA shares.
