Nvidia stock has plunged 18% in just 7 days, what could be the reason? Here's what reports are saying

Nvidia's stock has taken a significant hit this past week, dropping 18% in just seven days, and investors are left wondering what’s behind the steep decline. Business Insider reported that on Monday the stock dropped by as much as 8%, trading at $114.51, marking a troubling new low.

Nvidia entering bear market

Nvidia, known for its high-performance AI graphics processing units (GPUs), technically entered a bear market last week after the stock dropped over 20% from its high in early January, reported Business insider.

Earnings report: Strong, but not enough

Following a robust earnings report last week that exceeded analysts' expectations, Nvidia's stock continued to drop, sending investors into a worry mode.


Even with strong forward-looking guidance, the earnings report fell short of Wall Street's expectations and raised concerns about profit margins, as per Business Insider. But the investor concerns didn't just end here.

Leaked AI chips to China

News regarding Nvidia's leaking artificial intelligence chip sales to China have further increased apprehensions. According to the Wall Street Journal, Chinese technology firms are finding ways to acquire Nvidia's Blackwell GPUs, even under US export controls intended to stop this tech from flowing into China.

These high-performance chips, which include Blackwell server containing eight AI GPUs, can fetch more than $600,000 each in China, as per the report. While Nvidia's previous-generation Hopper server could sell for about $250,000 in the country, the report added.

The chips are entering China through black market traders via nations such as Malaysia, Vietnam, and Singapore, spurring concern about potential legal and regulatory repercussions for Nvidia, reported Wall Street Journal.

Singapore has launched a fraud investigation of Nvidia's overseas chip sales, according to a Bloomberg report. The probe is to find out whether servers shipped from Dell Technologies and Super Micro Computer to Malaysia contain Nvidia chips that are restricted from entering China, reported Bloomberg.

A warning for investors

Nvidia's shares declined below critical levels of resistance near $130 and is now below both its 50-day and 200-day moving averages, reported Business Insider. This indicates as a warning signal to traders, as per the report.

FAQs

What happened to Nvidia's stock this week?
Nvidia’s stock dropped by 18% in just seven days, with an 8% drop on Monday alone, hitting a new low of $114.51.

Why did Nvidia’s stock drop so much?
The stock entered a bear market after falling more than 20% from its January highs, and concerns over leaked chip sales to China, along with a disappointing earnings report, according to Business Insider.