Nvidia Crashed… Again. Is the AI Bubble Going Bust?
#NVDA plunged 8.5% on Thursday, February 27, making it the worst performer on the Dow Jones Index (#DJ30), despite posting strong, forecast-beating Q4 earnings. The reason? Investors were used to much better results, while the overall environment surrounding the company is becoming riskier by the day.
This drop follows Nvidia’s earlier 17% slump on January 27, when concerns over DeepSeek’s AI technology sparked fears about AI infrastructure spending. At the time, we embraced the possibility of a further slump towards $100 a share, but #NVDA showed a rebound instead. If you were asking yourself why, the reason is pretty simple, but also concerning. Not only retail investors bought back everything they could, but Nvidia itself took advantage of the dip, repurchasing 29 million shares worth $3.7 billion between January 27 and February 21.
The picture becomes even more concerning, if we look at the chart, and assess that the stock resumed its fall exactly on February 21, when the company’s buyback ended. It looks like Nvidia itself is trying to prevent its stock from falling.
While retail investors are still buying, the institutional world, led by top hedge fund managers, continues dumping its AI and high-tech positions at a record pace. At the same time, Warren Buffet’s cash pile touched the highest point from the 2008 Global Financial Crisis and the US stock market has reached the most overvalued level in history.
Meanwhile, Nvidia’s CEO Jensen Huang remains bullish, dismissing fears that new AI developments will hurt demand for Nvidia’s chips. However, yesterday’s sell-off suggests that investors are looking for more than just solid earnings – they want Nvidia to keep delivering outsized growth.
Our outlook on the company has not changed. We still think that $100 a share is a very plausible target for the stock to go to, giving traders at least a $20 profit potential from the current levels.
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