The start of 2025 appeared favourable for Nvidia (NVDA) shares from a fundamental perspective:

→ On 6 January, Nvidia CEO Jensen Huang delivered a keynote at the Consumer Electronics Show (CES).

→ On 22 January, the company's stock prices rose following President Trump's Stargate project announcement.

However, news from China triggered a sharp decline, with Nvidia's stock price plunging approximately 17% yesterday, as shown on the Nvidia (NVDA) chart.

According to Reuters, last week the Chinese startup DeepSeek launched a free AI assistant requiring minimal resources. By Monday, the assistant had surpassed its American rival, ChatGPT, in downloads from Apple’s App Store.

CNN reports that the R1 model is both powerful and significantly cheaper than AI technologies from OpenAI, Google, or Meta. DeepSeek claimed to have spent just $5.6 million on its base model, compared to the hundreds of millions or billions invested by American companies in their AI technologies.

This may have led market participants to conclude that the AI industry requires fewer Nvidia chips than previously thought, prompting a sell-off of Nvidia shares. This decline also impacted other companies in the sector, with sharp drops in Oracle (ORCL), Broadcom (AVGO), and others.

As a result, Nvidia lost its title as "the world's most valuable company" to Apple, and its CEO saw his fortune decrease by 20%.

Technical analysis of Nvidia (NVDA) stock chart indicates that:

→ The upward channel (marked in blue), formed by price fluctuations throughout 2024, has been broken, as the price fell well below its lower boundary.

→ The psychological resistance level of $150, previously highlighted in our analyses (most recently on 6 January), held firm despite numerous challenges.

→ The sharp drop, accompanied by a bearish gap between $142 and $128, can be interpreted as a market structure shift (MSS).

This development may lead to reduced investor interest in the AI sector, with NVDA stock likely to continue its decline within a downward channel.

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