Nvidia and AI Chipmakers’ Stock Decline

Nvidia and other AI chipmakers’ stocks are declining following Alibaba’s new AI model launch, with AI tokens’ market cap also seeing a significant decrease.

Stock Performance

Nvidia’s stock is down by 5.7% today, resulting in a nearly 18% decline year-to-date, marking its worst monthly performance since June 2022, according to Yahoo! Finance.

Q4 Earnings Report

Nvidia recently published its Q4 earnings for 2024 ending January 26, showcasing a year-over-year revenue growth of 78% at $39.33 billion for the quarter, beating analyst estimates of $38.25 billion.

However, despite exceeding forecasts, concerns over its new AI model, DeepSeek, have troubled investors, who fear potential reduced demand for Nvidia’s chips moving forward. Conversely, Nvidia claims DeepSeek has increased demand for its inferencing solutions, leaving market participants puzzled over the recent stock decline.

Another concern is Nvidia’s somewhat lower-than-expected profit margins, attributed to heavy investments in developing their new Blackwell GPUs. Nvidia anticipates profit margins will recover in the second half of the year.

Market Conditions

One factor contributing to Nvidia’s stock drop may include potential tariffs on Taiwan, where the company manufactures its AI chips. Imposition of these tariffs could escalate production costs, thereby impacting profitability. There’s also anxiety regarding possible U.S. restrictions on sales to China, vital for Nvidia’s growth in the global semiconductor landscape.

Jim Cramer sarcastically remarked on X, “Clownshow buyers of Nvidia, it went negative… now ok,” illustrating the market’s erratic reaction amid ongoing uncertainties.

> “Clownshow buyers of Nvidia, it went negative… now ok”
> — Jim Cramer (@jimcramer) March 5, 2025

Impact on AI Tokens

In line with Nvidia’s performance, the market cap of AI & Big Data tokens has dropped by nearly 5% over the past 24 hours and 9% in the last month. This decline indicates investor apprehension regarding AI cryptos due to potential slowdowns in AI hardware development, which could impede the growth of decentralized AI projects reliant on such technologies.

AI tokens like Story Protocol (IP) and Render (RENDER) suffered significant losses of 9% and 4% respectively in the last 24 hours. Both likely depend on Nvidia or similar high-performance GPUs for their operations. Similarly, Near Protocol (NEAR) and Virtuals Protocol (VIRTUAL), supporting GPU-intensive applications, faced steeper declines of 6% and 12% respectively.

Overall, Nvidia’s market movements appear to have a ripple effect, dragging down the entire AI sector, including related crypto-assets. Despite strong earnings last quarter, global uncertainties seem to be driving the current market sell-off for AI-related investments.