Although history cannot concretely predict the future, it has a strange history to rhyme with Wall Street, most often.
For more than two years, the stock market has been roaring more, with the three main indices – the Industrial average Dow Jones,, S&P 500And Nasdaq Composite – Reach several record high fence.
Although some catalysts have played a role in lifting actions, such as euphoria with a shares, the benefits of better than expected, and Donald Trump’s November victoryNothing supported this rally as the emergence of Artificial Intelligence (AI).
The empowerment of software and systems having the possibility of reasoning, acting alone and evolving to acquire new skills, gives this technology an apparently unlimited ceiling. Although PwC analysts fixed the global addressable for AI at $ 15.7 billions by 2030 In PrizeThe sky is really the limit if companies adopt AI solutions at a high pace and technology gains a consumer utility in a large band of industries.
No company was a more direct beneficiary of the rise Nvidia (Nvda 1.66%)). To its peak, Nvidia’s actions have added more than 3 dollars of market value in less than two years.
Image source: Getty Images.
Although it was placed on the pedestal of Wall Street, Nvidia’s actions lost 26% of its value – calculated from its intra -day summit of $ 153.13 on January 7, 2025, thanks to its closing price of $ 112.69 per share on March 7.
The question to a million dollars is: how important the Nvidia stock than the decline? The previous history can be a useful tool for answering this question.
Don’t be mistaken, Nvidia does a lot of things correctly
But before making assumptions about the future, it is just as important to understand the path that Nvidia followed to get to where it is today.
Investors can make an argument that The AI revolution does not occur without the material of Nvidia. The company’s graphic processing units (GPU) are effective brains that feed decision -making in second second in high remuneration data centers. The demand for the HOPPER (H100) chip from NVIDIA and now its Blackwell successor GPU architecture have been out of the scale.
To rely on this point, Nvidia was not afraid to invest in an aggressively innovation. Even with its HOPPER GPUPER GPUP OF IT Advantages well defined compared to other AI chips, the beginnings of Blackwell further solidifies its equipment as the fastest. In addition, Blackwell is considerably more energy efficient than its predecessor.
Something else that has undeniably helped Nvidia to arrive where it is today is the rarity of A-GPU. Even with Manufacture of Taiwan semiconductors The acceleration of its monthly capacity chip-on-wafer-on-subbstrat (cowos)-cowos is necessary to pack the main bandwidth memory required for the data centers with high compute-the demand for GPU AI has definitely submerged their offer. For Nvidia, it is led to an exceptional pricing power and a considerable increase in its gross margin.
The Cuda de Nvidia platform also helps bind things together. Cuda is that tool developers count to build major language models and make the most of their NVIDIA GPU. In other words, it is a tool that helps keep customers loyal to its product and services ecosystem.
The last piece of the puzzle for Nvidia was his draw with the most influential companies of Wall Street. Microsoft,, Meta-platforms,, AmazonAnd Alphabet have always been some of Nvidia’s best customers.
Image source: Getty Images.
NVIDIA is down 26% – here is how much it could decrease further
With a better understanding of how Nvidia has become one of Wall Street’s most valid companies, let’s come back to the question to be accomplished: how far could his stock fall?
Although history cannot concretely predict the future with 100%precision, it has a strange history of rhymes, most often, at Wall Street. Based only on the previous history, the Nvidia stock has a lot of inconvenience to come.
To start, each technology and following innovation in the past three decades endured a possible event of bubbles. This means that investors have systematically overestimated the adoption rate of the first rounds of new technology or new innovation, as well as its usefulness at the start of the stage. All proven innovations need time to mature, and nothing suggests that artificial intelligence will be the exception to this historical correlation.
If investors plunge into companies that build their data center infrastructure and AI solutions, they note that most are not close to the optimization of this technology, nor generate a positive return on their AI investments. These are characteristics of investors overestimating the adoption and usefulness of a big-big trend, and it indicates a bubble training.
The previous bubbles of technologies that change the situation, such as the Internet, 3D printing, blockchain technology and metovers, to name only a few, have seen the main companies of these trends lose in the district of 80% to 90% of their value on a peak base.
However, there is an asterisk for these historical data. The leaders of the Big-Big trends market which have been the hardest affected in the last three decades were often not diversified. Before the AI revolution took shape, Nvidia sold GPUs for PC games and the exploitation of cryptocurrencies, and it had a well-established virtualization software segment. This means that these existing segments would provide more than probably a floor in particular higher if the AI bubble had to break out.
Evaluation – In particular the Price / sale ratio (P / s) – can also provide a precious historical context.
NVDA PS ratio data by Ycharts.
With a few exceptions, such as PALANTOUT Technologies‘ P / S ratio of almost 100 three weeks agoThe leaders of the Next-Big-Big innovation market have culminated in P/ S ratios in the 30 to 40 district in the past 30 years. This is true for Microsoft, Amazon, Cisco systemsand Nvidia, the latter Completed to a P / S ratio of 42.39 last summer.
From the closing bell of March 7, the leaders of the Alphabet, Meta Platforms and Microsoft markets ordered respective P/ S ratios of 6.3, 9.9 and 11.2. Even after Nvidia’s withdrawal at 26%, it is still negotiated at a multiple of about 21.4 times sales. To simply align with other Mag-7 actions, in terms of P / S report, Nvidia could easily lose a little more than half of its value. This would reduce its course to around $ 55, against a peak of $ 153.13.
History also teaches investors that The scarcity of the early stage linked to an innovation in force does not last. While Nvidia took advantage of a significantly higher price for its H100 and Blackwell GPUs, an increase in production by competitors, Coupled with increasing internal competition (Most Nvidia’s best customers by net sales develop their own GPU AI), emits big problems for its price power and its gross margin.
Although Nvidia’s actions may seem attractive to certain investors, the previous history indicates an additional drawback.
Randi Zuckerberg, former Director of Development of the Facebook and Sister of the CEO of Meta Platforms, Mark Zuckerberg, is a member of the board of directors of Motley Fool’s. John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Suzanne Frey, director of Alphabet, is a member of the board of directors of Motley Fool’s. Sean Williams has positions in alphabet, Amazon and Meta platforms. The Motley Fool has positions and recommends Alphabet, Amazon, Cisco Systems, Meta Platforms, Microsoft, Nvidia, Palantant Technologies and the manufacture of Taiwan semiconductors. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.