The artificial intelligence (AI) sector is witnessing a sharp downturn as Nvidia and other AI chipmakers experience stock price declines. AI-related cryptocurrencies are also feeling the impact, with the market capitalization of AI tokens falling 5% in the last 24 hours and 9% over the past month.
Nvidia’s Stock Plunge and Market Concerns
Nvidia stock dropped 5.7% today, extending its year-to-date decline to nearly 18%. According to Yahoo! Finance, this marks the worst monthly performance for Nvidia since June 2022. Despite reporting strong Q4 earnings with a 78% year-over-year revenue increase to $39.33 billion—beating analyst expectations—the company’s stock has struggled to maintain momentum.
Investor uncertainty stems from several factors, including the launch of Alibaba’s AI model DeepSeek, which raised concerns about future demand for Nvidia’s chips. However, Nvidia has maintained that DeepSeek has actually boosted demand for its inferencing solutions, leaving the market puzzled by the continued sell-off.
Another factor weighing on Nvidia’s stock is its profit margins, which came in slightly lower than expected due to heavy investments in the production of its next-generation Blackwell GPUs. The company expects margins to improve in the second half of the year, but for now, investors remain cautious.
Geopolitical Risks and Tariff Uncertainty
One of the biggest concerns for Nvidia is the potential for U.S. tariffs on Taiwan, where the company manufactures its AI chips. If implemented, these tariffs could significantly raise production costs and impact Nvidia’s profitability. Additionally, ongoing uncertainty about whether the U.S. government will impose further restrictions on chip exports to China adds to the instability, as China represents a crucial market for Nvidia.
AI Tokens Follow Nvidia’s Lead
The turbulence in Nvidia’s stock appears to be rippling into the AI crypto sector, with AI & Big Data tokens losing significant market value. Investors seem to be pulling back from AI-related cryptocurrencies, fearing that a slowdown in AI hardware development could negatively impact decentralized AI projects reliant on high-performance GPUs.
Notable declines in AI tokens include:
- Story Protocol (IP): Down 9% in the past 24 hours.
- Render (RENDER): Declined by 4%.
- Near Protocol (NEAR): Dropped by 6%.
- Virtuals Protocol (VIRTUAL): Experienced the biggest hit, falling 12%.
These tokens, along with other AI-based crypto projects, rely heavily on advanced GPUs like those produced by Nvidia for processing large-scale AI computations. The market’s reaction suggests that as AI hardware companies struggle, investor confidence in AI crypto projects is also shaken.
Looking Ahead
Nvidia’s struggles serve as a reminder of the interconnectedness between AI technology and AI-driven blockchain projects. As the company navigates geopolitical risks, shifting demand, and ongoing investments in new technologies, the broader AI industry—including AI-focused cryptocurrencies—will likely remain volatile.
With investors keeping a close eye on Nvidia’s next moves, the market will be watching to see whether AI crypto tokens can recover alongside AI stocks or if further declines are ahead.
