Adam Spatacco, The Motley Fool

Wed, Jun 18, 2025, 10:08 AM7 min read

• This year's sell-offs in Nvidia stock were primarily driven by uncertainty about what DeepSeek's AI model means for long-term GPU demand and fears over the impact of President Donald Trump's tariffs.

• The rising levels of investment in AI infrastructure globally support a compelling growth narrative for Nvidia.

• Nvidia stock has been on a roll over the last several weeks, and I think it could keep rising.

• 10 stocks we like better than Nvidia ›

Megacap technology companies have been some of the biggest movers and shakers in the stock market throughout 2025. Among the hottest stocks in the artificial intelligence (AI) realm is Nvidia (NASDAQ: NVDA), but it has been struggling this year.

While the graphics processing unit (GPU) king's market capitalization peaked early this year at nearly $3.7 trillion, a months-long slide that bottomed out in April shaved about $1.4 trillion off its value.

However, Nvidia stock has rebounded over the last month or so and has almost fully recovered from that decline.

Let's explore what drove the sell-off in Nvidia to begin with. From there, I'll explain why investor enthusiasm for the chip designer is on the rise and detail why I think the stock is poised for an epic breakout during 2025's second half.

The chart below illustrates the fluctuations in Nvidia's market cap throughout 2025. The volatility in the stock in January and February was triggered by the emergence onto the scene of Chinese AI start-up DeepSeek.

Initial reporting took DeepSeek management at its word when it asserted that it had developed its highly sophisticated R1 model at an incredibly low price relative to competing AI models, and had done so entirely with older Nvidia chip architectures that aren't widely used by U.S. developers anymore. This caused many onlookers to question just how essential Nvidia's most advanced GPUs would prove to be for AI development and training broadly, and whether demand for its new Blackwell series of chips would be as strong as had been projected.

As more information about DeepSeek emerged, however, it became clear that the company may not have been entirely upfront about how it trained its model, or what the the real cost of doing so was.

Investors came to recognize that the existence of DeepSeek might not represent a major threat to Nvidia's business after all. Yet its shares continued to slide. Why?

Well, throughout the month of March, investors were more or less guessing whether President Donald Trump would, in fact, impose heavy tariffs on America's trading partners -- something he had often promised to do while campaigning.