Nvidia stock has retreated sharply over the past two weeks as investors have remained concerned about the artificial intelligence industry. The sell-off intensified after Firmus and AirTrunk abandoned their planned initial public offerings, sending jitters through the sector. Attention has now turned to Nscale, a Nvidia-backed neocloud company that is facing resistance over its listing.

Nscale IPO Valuation Under Pressure

Nvidia, one of the biggest investors in the AI space, is confronting significant challenges as several of its portfolio companies struggle. Firmus, an Australian company it backs, pulled its initial public offering (IPO) after investors pushed back against its high valuation. The company had been seeking a $30.5 billion valuation — effectively asking public-market investors to more than double the $15 billion mark it fetched in a fundraising only a few months earlier.

Investors are now pushing back against Nscale, another neocloud company seeking a $33 billion valuation — a figure that would propel it into the ranks of the biggest companies in the United Kingdom. According to Bloomberg, some investors have asked the company to raise cash at a valuation of $16 billion to $19 billion instead.

Neocloud and Bitcoin Mining Stocks Slide

The developments come at a difficult moment for companies across the AI space. CoreWeave, IREN, and Nebius — leading neocloud operators backed by Nvidia — have plunged by more than 50% from their all-time highs. Neoclouds are AI-focused cloud providers that buy Nvidia processors in bulk and rent the computing power to AI developers, a model that has made them significant buyers of the chipmaker's hardware. Bitcoin mining companies that are pivoting into the AI space, including Riot Platforms, MARA Holdings, and Core Scientific, have also fallen sharply.

The sell-off continued last week after Gartner warned that neocloud companies will need to announce significant impairments over the next few years, citing the gap between what AI companies are spending and the revenue they expect to generate.

Anthropic and OpenAI Revenue Growth Slows

Nvidia's stock has also come under pressure from an ongoing slowdown at the biggest companies in the AI industry, several of which are part of its portfolio. Anthropic's revenue came in at $16.8 billion in the third quarter, up sharply from $11.6 billion in the second quarter. The figures show the company is still growing at a faster pace, but the expansion was lower than expected. Reuters reported that some investors have started to temper their valuation expectations, with some placing an ideal figure at $1.5 trillion.

OpenAI also reported weak financials, with annualized revenue below $50 billion. That compares with earlier media reports suggesting its revenue had jumped to more than $70 billion. Taken together, the numbers indicate that the sector is slowing, and they could signal that investors are rotating toward open-weight companies such as Moonshot and DeepSeek, which publish model weights that developers can download and run on their own infrastructure.

Heavy Earnings Calendar Ahead

The next few weeks will be important for Nvidia shares. SpaceX, a company raising $40 billion to buy Nvidia chips, will publish its financial results on Tuesday. These will be the company's second results since it went public in June this year. Tesla, another leading AI company, will release its results on Wednesday. Meta Platforms, one of the biggest hyperscalers and a major Nvidia customer, also report on Wednesday, providing more color on AI spending.

Technical Analysis Points to Further Downside

The weekly chart suggests that Nvidia shares have more room to fall in the near term. The stock formed a shooting star candle, made up of a small body and a small upper shadow — a pattern that normally precedes a bearish reversal. Shares have also been forming a rising wedge pattern, composed of two ascending and converging trendlines, while the two MACD lines have completed a bearish crossover. The stock is therefore likely to break down, potentially toward the psychological level of $200.

This article is for informational purposes only and does not constitute financial or investment advice. Stocks carry substantial market risks, including volatility and potential capital losses. Readers should conduct independent research and consult a qualified financial adviser before making investment decisions.

This article first appeared on The Market Periodical.