After soaring 39% last year, Nvidia (NVDA 1.53%) stock has gotten punished by investors so far in 2026. While a 6% decline might not seem dramatic, consider the ongoing sell-off has wiped out roughly $400 billion of Nvidia's market value so far this year.
Let's explore the root causes of Nvidia's sell-off over the last month and assess if now is an opportunity for smart investors to buy the dip or run for the hills.
Image source: Nvidia.
Why is Nvidia stock going down?
While earnings season is in full swing, Nvidia has yet to report fourth-quarter results. Given investors don't have anything specific to point to regarding Nvidia's underlying business trends, the stock's sell-off looks all the more peculiar.
Below, I've detailed a few headwinds plaguing Nvidia investors right now:
- Perception of GPU dominance: Nvidia had a first-mover advantage in the GPU space, enabling it to swiftly build a structural moat in the early days of the AI revolution. While it's taken a few years for it to find its footing, Advanced Micro Devices is beginning to make up some ground in the GPU market. Big tech is increasingly complementing its existing Nvidia infrastructure with chips from AMD -- leading some investors to believe the chip king's growth could be headed for meaningful deceleration.
- The rise of custom silicon: Hyperscalers such as Meta Platforms and Alphabet have been collaborating with Broadcom to design custom application-specific integrated circuits (ASICs). ASICs focus on specific workloads as opposed to Nvidia's general-purpose GPUs, and rising budget allocation toward custom chips could fuel broader mixes in chip stacks. In turn, Nvidia's core data center segment could become challenged.
- Uncertainties around China: China is a strategically important market for Nvidia. While the company once had a large presence in the region, ongoing trade tensions related to President Donald Trump's tariffs and national security efforts have stalled Nvidia's growth in the Asian market. Although some progress has been made as of late, Nvidia's trajectory in a market as large as China is incredibly unpredictable given the fluid dynamics of geopolitical discussions.
NASDAQ: NVDA
Key Data Points
Is Nvidia stock a buy?
If you fully buy into the bear narrative from the talking points above, you'd think Nvidia stock is headed for a crash landing. In my eyes, there is a stark contrast between the rising skepticism and underlying realities, though.
Here's the big picture: Nvidia's upcoming Vera Rubin chip architecture has already witnessed unprecedented demand from some of AI's most influential developers. Currently, the company's backlog is estimated to be worth several hundred billion dollars.
Moreover, Nvidia's recent partnerships with Palantir Technologies, Nokia, Intel, and more suggest the company is actively diversifying its business and not solely relying on being a chip supplier for data centers. Given these dynamics, I think Nvidia's growth arc has only just begun.
NVDA PE Ratio (Forward) data by YCharts.
What's amazing is that Nvidia's forward price-to-earnings (P/E) multiple of 23 is hovering near its lowest levels in about two years. Another way of looking at this relationship is that despite having a number of compelling catalysts across hardware, software, and next-generation applications, investors are valuing Nvidia at its cheapest price in years.
I think the trends above suggest investors are treating Nvidia as a maturing chip business that's vulnerable to rising competition and macroeconomic uncertainties. But in reality, the bull case looks stronger than ever in my view. I see now as a no-brainer opportunity to buy Nvidia stock hand over fist.
