Nvidia stock falls below $97 as Huawei chip threat grows

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Nvidia stock falls

Export restrictions and Huawei’s chip rollout

Nvidia’s recent decline is not solely driven by technicals. A major headwind is mounting geopolitical pressure resulting from a new round of U.S. export restrictions on high-performance AI chips to China. Specifically, the U.S. Department of Commerce now requires Nvidia to obtain licenses to export its advanced H20 chips, part of its Hopper architecture, which are optimized for generative AI workloads. This restriction effectively blocks Nvidia from shipping high-end GPUs to China—a region that accounted for up to 20% of Nvidia’s data center revenue in recent quarters.

In response, Nvidia disclosed that it anticipates a one-time $5.5 billion charge due to inventory write-downs tied to chips destined for the Chinese market. This development has shaken investor confidence, especially as the company’s future sales growth in China is now deeply uncertain. Adding to the pressure, Huawei announced that it will begin mass production and shipment of its Ascend 910C AI chips. These chips are said to deliver computational performance on par with Nvidia’s H100, positioning Huawei as a serious competitor in the domestic Chinese AI chip market.

Huawei’s push into AI semiconductors could fundamentally shift the power balance in global chipmaking, particularly as Chinese institutions seek to reduce dependence on U.S.-sourced technology. The Chinese government is likely to continue investing heavily in domestic semiconductor development, creating long-term strategic challenges for Nvidia and other Western firms that rely on Chinese demand.

Volatility likely to persist as investors reassess valuation

The outlook for Nvidia in the near term remains bearish, driven by both technical breakdowns and macro headwinds. If the stock fails to defend the $95 zone, further downside toward $90 is likely. Below that, support sits near $85, a level last seen in late Q3 2023, which could serve as a medium-term floor.

While oversold conditions may produce occasional relief rallies, any upside is expected to be limited by the $100–$106 resistance range. A daily close above these levels would be required to shift momentum back to neutral. Even then, traders would likely remain cautious until clarity emerges on the long-term impact of U.S. export controls and the competitive threat from Huawei.

Investor sentiment has turned cautious as Nvidia's stock has dropped about 25% year-to-date, despite expanding AI partnerships like its deal with General Motors. This reflects broader concerns over tech valuations, geopolitical risks, and rising interest rates.

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