• NVIDIA (NVDA) shares fell 3.1% amid waning AI GPU scarcity and tariff concerns ahead of its February 26 fiscal 2025 earnings report.
  • The company faces a delayed Blackwell chip launch and shifting investor sentiment on sustained AI demand, with year-to-date shares down 2.6%.
  • Economic factors include reduced pricing power from easing supply constraints and U.S.-China trade tensions threatening billions in sales from China, a key market.

NVIDIA's stock decline reflects mounting pressures as the semiconductor giant navigates a pivotal moment in the AI boom. The 3.1% drop comes just weeks before its fiscal 2025 earnings announcement on February 26, with premarket trading showing additional volatility tied to concerns over an OpenAI (MSFT) infrastructure deal and post-CES 2026 slips of 0.4%, according to market data. Investors are grappling with whether NVIDIA can maintain its explosive growth trajectory amid signs that the AI GPU scarcity that fueled its margins is beginning to ease.

Efforts to capitalize on AI demand have hit a snag as supply constraints wane, reducing NVIDIA's pricing power. Gross margin, which peaked at 78.4% in Q1 fiscal 2025 due to AI GPU premiums, has declined 380 basis points over two quarters, people familiar with the matter say. Competitors like AMD (AMD) are offering cheaper alternatives, while hyperscalers develop in-house chips, potentially slowing NVIDIA orders. Without sustained demand, the company could face margin compression, though its gaming and data center segments provide a buffer.

Tariff concerns add another layer of uncertainty. U.S.-China trade tensions, including 10% tariffs on Chinese goods and ongoing AI chip export bans from 2022-2024, threaten billions in sales from China, NVIDIA's key market. No easing is expected under the current political climate, which aims to boost U.S. manufacturing competitiveness. "The regulatory environment is becoming more challenging," an industry analyst noted, requesting anonymity due to the sensitivity of ongoing negotiations. NVIDIA has not commented on how these factors might impact its earnings outlook.

The delayed Blackwell chip launch and shifting investor sentiment compound these issues. At CES 2026, NVIDIA unveiled AI models for humanoid robots and self-driving cars, such as Alpamayo, but the Blackwell delay has sparked debates on overhyped utility. Analysts are mixed, with some cautioning on AI spending duration and others making bullish calls for rallies to $250-$275 by 2026 via Vera Rubin chips and non-tech deals. Historical context suggests NVIDIA's ride on AI hype mirrors past "next-big-thing" bubbles, where stocks corrected after hitting high valuations.

In related developments, AMD and Intel (INTC) keynotes are being scrutinized for AI roadmaps, and Samsung (005930.KS) eyes Galaxy AI expansion amid memory shortages. NVIDIA executives have expressed concerns over a $100 billion, 10GW infrastructure deal with OpenAI, according to sources. As the earnings date approaches, market watchers will be keen to see if NVIDIA can address these headwinds and reassure investors about its long-term prospects in the rapidly evolving AI landscape.