NVIDIA shares plunged into bear market territory on Thursday, February 5, 2026, falling roughly 20% from record highs to their lowest level since December. This decline was part of a broader market rotation from growth to value stocks, mirroring a sell-off across the tech and software sector. Key competitor AMD tumbled 27% from its December high, while the iShares Expanded Tech-Software ETF (IGV) dropped more than 20%, entering a technical bear market amid fears of an AI-driven "SaaSpocalypse."
The sell-off was fueled by multiple investor concerns. Analysts worry that big-tech companies, major customers for NVIDIA's AI chips, may pare back spending. This fear accelerated after Microsoft reported a slowdown in cloud revenue growth for Q4 2025. Furthermore, geopolitical risks surfaced as the Trump administration reviewed sales of H200 chips to China, despite reports that Chinese tech giants like ByteDance, Tencent, and Alibaba were allowed to purchase 400,000 chips. Long-term competition also looms, with NVIDIA's largest customers—Google, Amazon, Microsoft, and OpenAI—developing their own ASIC chips.
Technical analysis pointed to further downside, with NVIDIA's chart forming a bearish head-and-shoulders pattern and breaking below key support levels like the 50-day moving average, suggesting a potential drop to the $150 level.
The narrative shifted on Friday, February 6, as NVIDIA stock rebounded sharply, surging about 5%. This rally was attributed to fresh demand signals for AI hardware and upbeat comments from a key supplier, Wistron, which indicated AI orders would grow in 2026. The Semiconductor Industry Association's forecast of $1 trillion in global chip sales this year further bolstered sentiment, reinforcing expectations that data-center spending will remain elevated.
Market commentators remain divided on the sustainability of the rebound. Some analysts view the supplier confirmations as evidence of long-term demand for NVIDIA's data-center GPUs. Others caution the move could be driven by short covering and options-driven flows, typical of a high-beta stock like NVIDIA, rather than a fundamental re-rating. Traders emphasized the need for follow-through buying and volume confirmation to validate a new rally.
The tech sector turmoil had a spillover effect on the cryptocurrency market. Concurrent reports indicated Bitcoin price was under pressure, with its 21-Week Exponential Moving Average weakening and the $60,000 support level at risk. A separate article highlighted a broader crypto market crash, attributed in part to a top economist predicting a "cryptocurrency apocalypse," though this was presented as external commentary.
