NVIDIA (NVDA) has been in a tailspin lately, with the stock down nearly 40% from its early October all-time highs. This latest move has echoes of the collapse seen during Liberation Day, with the difference being that this time around the decline is unfolding at a slower pace. At today’s lows, NVDA is trading nearly 30% below its 200-day moving average, matching the extreme undershoot seen during the Liberation Day panic.

To put things into perspective, the setup for NVDA right now is similar to what we saw during the summer of 2020, when the stock plummeted by over 50% in a matter of weeks. While the current situation is certainly concerning, it’s worth noting that NVDA has proven to be a resilient stock in the past, with a history of bouncing back from significant declines.

One factor that could be contributing to NVDA’s latest decline is the ongoing global chip shortage, which has had a ripple effect across the tech sector. As the world’s leading supplier of graphics processing units (GPUs), NVDA is feeling the pinch of reduced demand and higher production costs. This perfect storm of factors has led to a significant decline in NVDA’s stock price, with the potential for further downside in the near term.

Another factor to consider is the impact of the COVID-19 pandemic on the global economy. While the situation is improving in some parts of the world, the recovery is far from complete, and there are still many challenges ahead for businesses and investors alike. In this environment, it’s understandable that investors might be hesitant to invest in risky assets like tech stocks, which could lead to further downward pressure on NVDA’s price.

Of course, there are also bullish factors at play, such as the ongoing innovation and advancements in NVDA’s product lineup, as well as the company’s strong balance sheet and history of delivering impressive financial results. While these factors may not be enough to offset the current bearish momentum, they do provide a foundation for long-term growth and could help to stabilize the stock over time.