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Is buying the dip the best strategy in 2025?

This article was updated on
This article was first published on
A polished, silver 3D rendering of the Nvidia logo is placed prominently against a white background.

So far in 2025, what looks like market chaos has actually been a goldmine - at least for the brave. Every wobble, every sharp drop, every so-called “bloodbath” has turned into a buying opportunity. And those who dared to dive in? They’re laughing all the way to the bank. 

With the S&P 500 at record highs and tech stocks like Nvidia bouncing back stronger after every fall, one question keeps coming up: is buying the dip not just working 0 but winning?

Nasdaq record highs 

Let’s start with the numbers. According to analysts, if you’d simply bought the Nasdaq 100 every time it had a down day this year, you’d be up roughly 32% - the best result for that strategy in five years. For context, this time last year, that return sat at a modest 5%. 

The pace we’re seeing now puts 2025 on track to become the best year for dip-buying since at least 1985. Yes, even better than the bubbly days of 1999.

A line chart titled "Exhibit 9: Buy-the-dip strength in the Nasdaq in 2025 has been one of the strongest ever in its history
Source: BofA Global Research

And it’s not like this has been a calm ride either. Out of the 124 trading days so far, the Nasdaq’s been down in 51 of them. That’s a whole lot of red candles - but also a whole lot of green rebounds.

Nvidia stock dips harder - and snaps back faster

If the market as a whole has rewarded dip-buyers, Nvidia has practically crowned them royalty.

The AI darling kicked off the year under pressure from China’s DeepSeek, a cheaper challenger in the machine-learning space. Then came the meltdown: on 27 January, Nvidia logged its worst-ever single-day drop - a brutal 17% fall. Ouch.

But that pain didn’t last. By early February, the stock had bounced back 20% heading into earnings. It wasn’t a one-off either. In April, Nvidia followed the market lower again, this time on fears surrounding Trump’s proposed tariffs. Shares tumbled 33% to their lowest point of the year.

A line chart titled “Nvidia’s stock price year-to-date” showing price movements from January to June 2025.
Source: Investing.com

And then, you guessed it, another rally. A steep, unapologetic one. Since bottoming out, Nvidia has gone on to set new record highs, with shares rising 12% in just the past month. It’s been a dream for traders with the stomach for sharp drops and the conviction to hold through them.

Nvidia keeps hitting the Wall Street news 

This isn’t just retail traders on Reddit throwing darts. Wall Street is increasingly convinced Nvidia’s dip-buying window is more than just luck.

Citi recently raised its price target to $190, suggesting a further 15% upside from current levels. One firm went even bolder, pegging a target at $250 - a price that would value Nvidia at a mind-bending $6 trillion.

A bar chart titled "Citi Lifts Nvidia's Price Target" showing analyst price targets for Nvidia ($NVDA).
Source: Yahoo Finance

Why the enthusiasm? Simple: governments are buying AI infrastructure like it’s the new electricity. Citi’s analysts say sovereign demand alone could already be contributing billions of dollars in revenue this year. They expect it to ramp up even more in 2026.

The AI gold rush is real

At Nvidia’s recent generative AI conference, insiders floated a potential benchmark for national AI infrastructure: one supercomputer or 10,000 GPUs per 100,000 government employees. Think about that. That kind of buildout could keep Nvidia busy - and profitable - for years.

The company’s Blackwell GB200 chips are already powering most of these projects, and Citi believes the rollout is only accelerating. Supply chain concerns? Largely resolved. Rack buildouts? “Happening at a rapid pace.” Even the transition to next-gen GB300 chips is expected to be smooth, thanks to lessons learned from previous launches.

Global AI arms race: Green lights, with a hint of risk

Citi now expects Nvidia’s data centre revenue to rise 5% in FY 2027 and 11% in FY 2028, with networking sales surging even faster. Margins are expected to stabilise in the mid-70% range, which is excellent for a company scaling at this pace.

A bar chart titled “Nvidia Data Center Revenue Growth Projection ($Mn)” showing annual revenue estimates from 2023 to 2032. 
Source: Seeking Alpha

That said, there are still clouds on the horizon. Trump’s administration could reintroduce export restrictions - particularly with scrutiny on Malaysia and Thailand for possible indirect shipments to China. Regulatory risks remain real, especially for a company at the heart of a global AI arms race.

Dollar-cost averaging vs timing/buying the dip

If your timing’s been good this year, it’s not even close - buying the dip has been a beast. The market’s bouncing back with a vengeance, and Nvidia’s chart looks more like a trampoline than a trendline. Add in soaring demand, bullish analyst upgrades, and a possible sprint to a $4 trillion market cap, and it’s easy to see why traders are so confident.

But here’s the unfortunate twist, a Vanguard study analyzing 90 years of S&P 500 data, revealing that even perfect market timing to "buy the dip" underperformed dollar-cost averaging (DCA), challenging the common investor belief that timing dips maximises returns

A line chart titled “Buy the Dip vs. DCA – All 40-Year Periods,” comparing the outperformance of a buy-the-dip (BTD) strategy versus dollar-cost averaging (DCA) in the S&P 500. 
Source: Dollars and data.com, Christy capital

So, in a 2025 where buying the dip and holding your ground, especially with stocks like Nvidia, has rewarded you. the market’s been more than happy to reward you - the strategy has shown vulnerabilty in the long-term. 

But as far as 2025 is concerned, volatility hasn’t been the enemy this year - it’s been the opportunity.

Nvidia outlook

At the time of writing, Nvidia is showing signs of buy-side exhaustion after a significant rally, hinting at a potential reversal. However, the volume bars show that dominant buy pressure over the past few days has been met by disproportionate sell-side pushback, hinting that an upside move could still be on. 

If we see an uptick, prices could encounter resistance at the $161.55 resistance level. Conversely, if we see a slump, prices could find support floors at the $141.75, $132.75, and $103.35 support levels. 

A daily candlestick chart of Nvidia Corp (NVDA) showing price action from late April to early July 2025.
Source: Deriv MT5

Is trading Nvidia dips a potential winning strategy?  You can speculate on Nvidia’s price trajectory with a Deriv MT5 account.

Disclaimer:

The performance figures quoted are not a guarantee of future performance.