Shares of AI semiconductor company NVIDIA (NVDA) dropped more than 6% on Wednesday. The sharp decline sets the stage for a test of the stock’s critical price support of $110 within the next week.
Shares started the day on a weak note following headlines that the U.S. has placed more than 50 Chinese companies on a blacklist of export restrictions for advanced computing capabilities. NVIDIA shares have been shaken by similar headlines in the past, however not when the stock was in a technical pattern like now.
Compounding the decline were headlines that that Chinese environmental regulations could hurt NVIDIA's sales in the country. In total, China makes up for roughly 13% of NVIDIA’s exports with Taiwan accounting for 16%, both lower than previous years.
Tightening regulatory issues have provided a headwind for NVIDIA over the last year as the United States seeks to curb National Security concerns and maintain its technological leadership over China.
Wednesday’s selloff marks the 5th one day decline of NVIDIA stock in 2025. For comparison, NVIDIA saw 12 one-day drops of -5% in 2024, 2 in 2023 and 30 in 2022. This year’s current pace puts NVIDIA on pace for more than 20 of these decline.
Looking at the stocks chart and its technical trends, NVIDIA saw it's 50-day moving average shift into a bearish trend in mid-January, identified in the chart below. Shares last saw this type of environment in September of 2024 as the stock traded in a wide range from June through August.
Through that technical struggle, NVIDIA shares remained above their long term 200 day moving average, something that changed in January.
Last week, a more meaningful shift in momentum occurred when NVIDIA stock posted a “Death Cross” pattern.
A death cross occurs when a stock's 50 day moving average crosses below the longer 200 day moving average. The pattern signals a long-term shift in momentum and generally forecasts lower prices over the next three to six months.
Nvidia's last death cross occurred in April of 2022 and preceded a 50% decline in the stock over the next six months. Shares ultimately bottomed in October of 2022.
Last week's death cross sets the stage for a showdown between the bulls and the bears at Nvidia's $100 price.
Round numbers like $100 tend to provide support for a stock from a psychological perspective of investors. NVIDIA last tested its $100 price level in August and September of 2023, resulting in a rally from $100 to the stock’s all-time highs of $150.00.
The combination of Nvidia's death Cross and a break below the $100 price mark will target longer-term selling as investors continue to question whether NVIDIA and other AI related stocks are in the beginning of a post-bubble re-valuation.
From a long-term perspective, Invidious shares remain in a long-term bull market trend with the stock’s 20-month moving average residing at $95. A move below that price will put the stock in a long-term bear market trend.
NVIDIA’s last long-term bear market occurred in 2022, immediately following the Death Cross mentioned above, April through October.
Long-term investors should approach the stock cautiously given the heightened risk of the chip giant’s potential for extended losses.
