CNBC’s Jim Cramer on Wednesday cautioned investors about Nvidia’s ongoing stock struggles, warning that the artificial intelligence (AI) giant could face even more turbulence after suffering a 5.74% drop in a single session.
As concerns over rising competition and new U.S. trade policies grow, the once-dominant semiconductor stock is showing signs of weakness.
“Nvidia’s the linchpin of this group, and the pin is failing,” Cramer said. “I don’t know whether the stock plunges from here, but if you like it enough to keep owning it, I say prepare for the turbulence.”
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The warning came as the broader stock market ended a three-day rally, with major indexes closing in the red. The Dow Jones Industrial Average declined 0.31%, the S&P 500 lost 1.12%, and the Nasdaq Composite—which is heavily concentrated in tech stocks—fell 2.04%. Several major tech companies, including Meta, Amazon, Alphabet, and Tesla, saw their stock prices decline alongside Nvidia.
Much of this downward pressure on the market was driven by investor anxieties over President Donald Trump’s upcoming round of tariffs, set to take effect on April 2. The looming trade restrictions have injected fresh uncertainty into the market, particularly for companies like Nvidia that have global supply chains and are heavily dependent on international markets.
Nvidia’s $600 Billion Stock Plunge and Rising Chinese AI Competition
While Nvidia has been one of the biggest beneficiaries of the AI boom, its stock has come under increasing pressure in recent months due to intensifying competition in the AI chip market. The company, which had led the market for most of last year, has struggled to maintain momentum amid concerns that its dominance may be under threat.
The most significant blow came in January 2024, when Nvidia experienced the largest single-day stock loss in U.S. history, erasing nearly $600 billion in market value. The selloff was triggered by the emergence of DeepSeek, a Chinese AI startup that unveiled a groundbreaking AI-driven semiconductor technology aimed at competing directly with Nvidia’s high-end chips.
DeepSeek’s entry into the market sent ripples through Wall Street, as investors scrambled to reassess Nvidia’s long-term prospects. The startup’s cost-effective AI solutions have raised concerns that Nvidia’s premium-priced chips could lose market share, especially in regions where affordability is a key factor.
China’s aggressive push into AI chip manufacturing has further fueled fears that Nvidia may struggle to maintain its dominant position. Several Chinese companies, backed by significant government funding, have been developing alternative AI chips that offer comparable performance at lower costs. This has led to speculation that major AI firms may shift away from Nvidia’s expensive GPUs in favor of cheaper alternatives.
The “Death Cross” and Fears of Continued Stock Turmoil
Adding to investor fears, Nvidia has recently exhibited a bearish “death cross” pattern—a widely watched technical signal that suggests a stock may face further downside. This pattern occurs when a stock’s 50-day moving average falls below its 200-day moving average, often viewed as an indicator of sustained weakness in stock performance.
“The ‘death cross’ is widely seen as a terrifying development,” Cramer explained, warning that Nvidia’s struggles could spill over into the broader AI sector.
With Chinese AI companies recording cost-effective breakthroughs, analysts fear that Nvidia’s stock could remain under pressure for the foreseeable future. If alternative AI chips continue to gain traction, Nvidia may be forced to cut prices or innovate at an even faster pace to maintain its competitive edge.
Cramer Remains Bullish on AI But Warns of Volatility
However, Cramer maintained his long-term faith in Nvidia and the AI industry as a whole. He argued that while Nvidia is currently experiencing turbulence, the company remains a cornerstone of the AI revolution, particularly in the development of advanced semiconductors.
“One day… we’re going to get some certainty on Nvidia,” Cramer said. “And if we can get that certainty, we’ll also know what’s happening with a whole host of other stocks.”