Nvidia stock (NASDAQ: NVDA) fell more than 1.6% on Monday, slipping into the red as investors digested major strategic announcements that raised fresh questions about capital deployment.
The selling reflects a mix of year-end profit-taking and growing skepticism about whether the company is overcommitting capital on emerging technologies.
Nvidia stock: Strategic moves amplify investor questions
Two announcements collided on Monday morning, both raising capital-allocation concerns.
First, Intel disclosed that Nvidia completed a $5 billion private stock purchase, acquiring 214.7 million shares at $23.28 per share.
That’s a significant bet on a competitor in structural decline. Intel is struggling with market share losses, even as the broader chip sector booms.
Investors immediately questioned the logic: why would Nvidia, already holding $60 billion in cash and short-term investments, deploy capital into Intel when Intel faces secular headwinds and operational challenges?
Then there’s the Groq deal. Announced last week but amplified on Monday, Nvidia agreed to its largest transaction ever, a $20 billion purchase of Groq’s inference technology and key personnel.
The price tag tells the story.
Groq was valued at roughly $6.9 to $7 billion in its last funding round, meaning Nvidia is paying nearly three times that valuation for assets and a licensing agreement.
Market participants questioned whether Nvidia is overpaying for a company whose core technology may not justify a $20 billion premium, particularly when custom silicon from Google and Amazon is already fragmenting demand.
The capital deployment concerns run deeper.
In 2025 alone, Nvidia announced over $140 billion in investments: $100 billion for OpenAI, $10 billion for Anthropic, $2 billion for Synopsys, plus the Intel and Groq deals.
Analysts noted that such aggressive acquisitions and equity investments raise doubts about whether Nvidia should return more capital to shareholders through buybacks or special dividends instead.
When a company is worth $4.6 trillion and still piling cash into new ventures, investors start questioning the returns on those bets versus the value of cash returned to owners.
Year-end selling and holiday liquidity amplify moves.
Beyond strategic concerns, pure market mechanics are at play.
Monday’s decline comes during the thinnest trading period of the year, the holiday week, when volume dries up, and small selling can create outsize price moves.
Nvidia is up 41.92% year-to-date, a gain that invites profit-taking as institutional investors rebalance portfolios before 2026.
The stock has fallen 11.37% from its October high of $212.19, suggesting some of the air has already left the balloon.
The broader context matters too.
Chip stocks broadly are retreating as investors reassess AI valuations heading into year-end.
The Fed’s policy minutes are due this week, and traders are watching whether any hawkish signals about interest rates could dent the appetite for stretched-valuation growth stocks.
Year-end risk-trimming is a standard playbook strategy; sellers are locking in gains before the calendar flips.
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