What's behind Nvidia's latest stock pullback?

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Nvidia slides 1.04% to $193.38 today

Highlights

DeepSeek's move to develop proprietary AI chips threatens Nvidia's dominance in a crucial AI hardware market.
Market sentiment on NVDA is pressured by concerns over customer shifts as DeepSeek reduces reliance on Nvidia hardware.
NVDA trades below key short- and medium-term moving averages, with technical signals skewed strongly bearish as downside risk dominates near-term price action between $189.96 and $196.8.

Market sentiment pressured as DeepSeek chips threaten Nvidia’s China presence

Chinese AI startup DeepSeek has begun developing its own AI inference chips, potentially reducing future demand for Nvidia's hardware in a key growth market, according to Tradingkey. This move introduces a competitive risk for Nvidia, as DeepSeek was previously a customer for both Nvidia and Huawei. The development has pressured market sentiment toward NVDA shares, reflecting concerns about the company's exposure to evolving customer sourcing strategies.

Resistance at key averages as momentum indicators highlight seller control

On the technical front, NVDA is trading below the MA-20 and MA-50 on the hourly chart, indicating short- and medium-term resistance with these averages acting as dynamic barriers. The MA-200 on the daily timeframe continues to function as long-term support. The Ichimoku Kijun at $196.49 marks immediate resistance. Among momentum indicators, the Moving Average Convergence Divergence (MACD) and Awesome Oscillator both signal strong sell bias, while the Average Directional Index (ADX) reads as neutral. The Relative Strength Index (RSI) is at 46.95, suggesting a slight downward tilt, and both Stochastic RSI and Commodity Channel Index (CCI) remain neutral. Bull/Bear Power is currently oversold, confirming that sellers are in control of intraday dynamics.

Downside risk elevated as sideways trade expected within defined band

Over the next several trading sessions, NVDA is expected to fluctuate between $189.96 and $196.8, a volatility band relative to current levels. The likelihood of a short-term upside reversal remains very low, while the risk of further downside action is elevated. Baseline expectations see sideways trading within this range. An upside scenario would require a break above immediate resistance, while renewed downside would be confirmed by a move below the lower end of the projected corridor.

Viktoras Karapetjanc, expert at Traders Union, sees Nvidia’s short-term picture shaped by both technical pressures and evolving sentiment around customer demand. He points to the news of DeepSeek developing its own AI chips as a signal of rising competitive risk, echoing unease about Nvidia’s hardware dominance in important growth regions. Despite current sell signals, Karapetjanc remains constructive over the long term as support levels remain intact and large-cap tech sentiment is resilient. He believes a clear breakout above $196.49 could turn the outlook more positive, but expects a sideways phase for now. "While the near-term bias leans defensive, I see strong structural drivers for Nvidia in the AI hardware space and would watch for momentum to build once resistance clears."

Earlier, analysts noted that heightened regulatory scrutiny and the rise of local Chinese competitors posed significant risks to Nvidia’s position in the AI chip market. The latest developments, including DeepSeek's move to develop its own AI chips and prevailing technical weakness, reinforce the downside risk for NVDA, making a drop below the current volatility band a critical scenario for traders to watch.

Source of Data: NVDA Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.