Nvidia Stock at $110: Bearish Outlook and Analysis

Nvidia at $110

On March 6, 2025, Nvidia’s stock price stands at $110, down from recent levels after a Q4 2025 earnings report showing $39.3 billion in revenue and a $43 billion Q1 2026 projection. Despite these figures exceeding forecasts, the stock lost over $200 billion in valuation in a single day. This drop coincides with tariffs introduced by the Trump administration, affecting tech supply chains and profitability. This article examines the case for further decline in Nvidia’s stock, followed by a brief counterpoint suggesting potential resilience. The analysis concludes that selling is the preferable short-term strategy, while long-term holding requires caution due to current uncertainties.

Impact of Tariffs

Tariffs form the primary factor behind Nvidia’s recent decline. Policies effective since February 4, 2025, impose 25% tariffs on imports from Canada and Mexico and 10% on goods from China. Nvidia depends on a global supply chain, including manufacturing in Mexico for AI servers. These tariffs increase production costs, potentially reducing margins on GPUs and data center products. Estimates suggest consumer purchasing power could decrease by $90 to $143 billion annually, limiting demand for tech products that use Nvidia components.

This cost increase affects both supply and demand. A projected 68% reduction in laptop and tablet purchases could lower sales in Nvidia’s consumer GPU segment, a notable revenue source despite growth in data centers. Raising prices to offset costs may reduce demand further, while absorbing costs impacts profitability. The stock’s trailing PE ratio of 40.46 indicates a high valuation relative to these risks, and its beta of 1.76 suggests sensitivity to market shifts. The 13% drop by March 3, 2025, reflects these concerns, with potential for further decline to $90 or $87, aligning with the lower range of analyst targets.

Market Trends and Speculative Shifts

Market dynamics contribute to the case for decline. The Q4 earnings, though above expectations, matched prior leaks, leaving no room for significant gains. Options trading saw reduced volatility, lowering premiums for calls, puts, and straddles, indicating a shift away from speculative buying. This follows a period of high expectations tied to AI growth in 2024, which has since moderated as investors reassess risks.

Technical indicators support this view. The stock fell below $120 support, with selling volume suggesting institutional exits. Momentum measures like the RSI show oversold conditions without a reversal. The forward PE of 26.47 assumes earnings growth, but tariffs and potential demand weakness challenge this. Market makers may maintain downward pressure to clear speculative positions, pointing to a consolidation phase with risk of lower prices.

Broader Tech Sector Pressure

Tariffs extend beyond Nvidia, affecting the tech sector as a whole. Higher costs could reduce Nvidia’s 95% share of the $158 billion GPU market if competitors adjust more effectively. The recent RTX 5070 Ti GPU launch faces uncertainty if prices rise due to tariffs. Demand for AI infrastructure remains, but consumer markets may contract, impacting overall revenue.

The duration of tariffs, possibly extending into 2026, adds uncertainty. The $43 billion Q1 guidance relies on stable supply chains and enterprise spending, both at risk. The stock’s initial flat response to earnings, followed by a sharp drop, mirrors wider tech sector concerns. This suggests Nvidia’s decline is part of a systemic reaction to trade policy shifts, increasing the likelihood of continued pressure.

Potential for Resilience

A counterpoint exists based on Nvidia’s financial position. Q4 revenue of $39.3 billion, up 78% year-over-year, and net income of $22.1 billion, up 80%, demonstrate operational strength. The $43 billion Q1 2026 guidance indicates 65% growth. With $32.94 billion in net cash and a 119.18% return on equity, Nvidia has resources to manage short-term challenges. Projects like the Evo 2 genomic model and partnerships with Toyota for autonomous driving highlight ongoing innovation.

This counterpoint relies on Nvidia’s role in AI markets. Demand for AI chips persists, supporting long-term revenue potential. The PEG ratio of 0.81 suggests undervaluation relative to growth, and analyst targets averaging $171.24 indicate a 55.67% upside. However, tariffs and market conditions limit near-term gains, making this a consideration primarily for those with extended timelines.

Sell in the Short Term, Monitor for the Long Term

The analysis favors selling Nvidia stock at $110 in the short term. Tariffs, market shifts, and sector-wide pressures point to a decline toward $90 or $87. The combination of cost increases, demand risks, and speculative withdrawal outweighs current positives. Holding or buying now carries risk due to unresolved uncertainties.

For a longer perspective, waiting for a lower entry point, such as $90, may provide value if tariff effects lessen. The company’s financial health and market position suggest recovery potential, but timing depends on external factors like trade policy outcomes. Selling now and reassessing later aligns with the data as of March 6, 2025.

Final Observations and Steps Forward

Nvidia’s situation reflects challenges facing tech firms in 2025, driven by trade policies and shifting investor priorities. The immediate outlook prioritizes cost and demand risks over growth prospects. Long-term recovery hinges on navigating these obstacles, a process that remains unclear.

For action, selling at $110 minimizes exposure to near-term declines. Monitoring tariff developments and market stabilization offers a chance to reenter at a lower price. Allocating funds to less volatile sectors during this period reduces risk while preserving capital for future opportunities.

Shaun

Founder

With over a decade of expertise spanning investment advisory, investment banking analysis, oil trading, and financial advisory roles, RealisedGains is committed to empowering retail investors to achieve lasting financial well-being. By delivering meticulously curated investment insights and educational programs, RealisedGains equips individuals with the knowledge and tools to make sophisticated, informed financial decisions.

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Shaun

Founder, Analyst

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