Technology

Nvidia Stock Just Fell Below a Key Level. What That Means.

By Paul R. La Monica

Updated Jan 30, 2025, 4:12 pm EST / Original Jan 30, 2025, 3:19 pm EST

The broader stock market rose Thursday, but for much of the day, Nvidia investors weren’t taking part in the rally. Fans of the AI chip giant may need to get used to being left behind.

Shares of Nvidia ended Thursday up 1% to about $125, but shares spent most of the day in red and briefly dipped below a key technical measure. That could mean more downside ahead.

Nvidia NVDA+0.98%  stock has now tumbled nearly 7% so far this year. Earlier Thursday, the shares stumbled to around $118, breaching their 200-day moving average around $122. This figure—calculated by taking the average closing price of a stock over the prior 200 trading days—is often viewed by technical analysts as a key resistance level, or a floor for a stock if you will. Once a stock goes below that, some fear that there’s much more room to fall.

Nvidia has been rocked this week due to worries about competition from cheaper artificial-intelligence technology from China, following the release of a new AI chatbot app named DeepSeek. Short sellers—investors who bet that a stock will go down —piled into Nvidia’s shares Monday, compounding the selloff that ultimately resulted in the stock’s one-day drop of 17%.

Interestingly though, Nvidia’s near-term market woes are n’t creating a sense of panic for stocks overall, the tech sector’s Magnificent Seven, or even the rest of the semiconductor sector.

The PHLX Semiconductor Index SOX +2.29%, which includes Nvidia, jumped more than 2% Thursday and has stabilized since Monday’s crash. It’s also worth noting that several other big chip stocks, such as Broadcom AVGO +4.51%, ARM Holdings, Marvell Technology, and Taiwan Semiconductor rallied Thursday and are trading above their 200-day moving averages.

The Roundhill Magnificent Seven exchange-traded fund is also about 20% above its 200-day moving average, a sign that the DeepSeek scare hasn’t hurt tech heavyweights Apple, Microsoft, Meta Platforms, Amazon.com, Alphabet, and Tesla.

So the Nvidia selloff might not be a sign of further weakness in tech overall. It could simply be the case that Nvidia’s shares, which more than doubled in 2024, needed to cool off a bit.

When discussing Nvidia and DeepSeek, Wall Street may be talking a lot about the so-called Jevons Paradox, the notion that a decline in something’s price will lead to higher demand. But Isaac Newton’s more famous line about the law of gravity might best describe what has happened (and could happen next) for Nvidia stock: What goes up must come down.

Write to Paul R. La Monica at paul.lamonica@barrons.com