Shares of Nvidia Corp. NVDA have fallen 13.13% in 2025, wiping approximately $375 billion in investor wealth despite strong fourth quarter earnings. While some analysts say that this could be because of the company’s outlook on “gross margins,” others believe that these concerns are “misplaced”.
What Happened: The chipmaker led by Jensen Huang dropped 8.48% to $120.15 apiece on Thursday following the fourth quarter earnings on Wednesday in after-hours. While the technology giant beat estimates on all fronts, its Blackwell AI chips recorded a staggering $11 billion in first-quarter sales alone—the fastest in the company's history.
However, the market reaction wasn’t upbeat because of a “sequential dip in its gross profit margins, heightened competition, persisting customer concentration, and stratospheric expectations,” said Subho Moulik, the founder and CEO of fintech platform Appreciate.
“Nvidia earnings were excellent and the concern about margins is misplaced,” said Nigam Arora and Dr Natasha Arora from The Arora Report in their note.
Calling it a “winner’s curse,” Moulik said that Nvidia's near-flawless track record has set exceptionally “high investor expectations”. With rapidly evolving AI sector and looming macroeconomic uncertainties, “the margin for error is razor-thin,” he added.
In 2025, the stock has underperformed the market and pulled the tech-heavy Nasdaq down with it.
| Stock / ETF / Index | YTD Performance | Six Month Performance | One Year Performance |
| Nvidia Corp. | -13.13% | 11.25% | 54.71% |
| Invesco QQQ Trust, Series 1 QQQ | -1.95% | 8.33% | 14.93% |
| Nasdaq 100 Index | -2.02% | 8.40% | 14.97% |
“From an investment perspective, it remains a buy on dip, particularly with its next-gen Blackwell chips posting amazing numbers and protect Nvidia's medium-term runway,” said Moulik.
According to Arora Report, “The real issue facing NVDA as a stock is that it is in the formidable stage,” which according to the note is the fifth stage of a long trade. The note explained that a stock witnesses a “crowded trade,” when it enters the fifth stage after logging in the highest alpha in the fourth stage of a long trade.
Why It Matters: The fourth quarter gross margins fell 71%, barely meeting estimates but down from 73.5% last quarter. But analysts believe that the fall in margins was expected because of the Blackwell production ramp up. The adjusted gross margins aren't going to improve soon, with the management expecting it to remain in the low 70s, said Moulik.
Additionally, DeepSeek has challenged U.S. AI exceptionalism, potentially reshaping the chip market as its model prompts more players to replicate it, casting doubt on future AI chip volume and value growth, added Moulik.
Price Action: Shares of Nvidia were 0.93% higher in premarket on Friday, whereas QQQ advanced 0.36%.
Benzinga tracks 41 analysts with an average price target of $176.13 for the stock, reflecting a “buy” rating. Estimates range widely from $120 to $220. Recent ratings from DA Davidson, Cantor Fitzgerald, and Benchmark average $175, suggesting a potential 44.15% upside.
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