Nvidia stock drops 2% with Huawei preparing rival AI chip
China remains one of Nvidia's largest and fastest-growing markets
As of April 29, Nvidia stock is trading at $108.73, down 2.05% in the past 24 hours. The decline comes as part of a broader pullback in tech stocks, compounded by negative headlines involving competition from China.
On the technical front, Nvidia's price action over the past few weeks has formed a falling wedge pattern, which is generally seen as a bullish reversal indicator. Traders will be closely watching if the stock can break out of this formation to the upside in the coming sessions. The current relative strength index (RSI) sits slightly above 50, indicating growing buying pressure even as the stock trades lower.
However, caution is warranted because the price remains beneath key moving averages, such as the 20-day and 50-day exponential moving averages (EMAs), which could act as dynamic resistance points. Key technical levels to watch are immediate resistance at $115 and a stronger overhead barrier around $130. These are prior pivot points where sellers previously overwhelmed buyers.
NVDA stock price dynamics (February 2025 - April 2025). Source: TradingView.
On the downside, Nvidia finds initial support at $96, corresponding to the recent swing low, and a more critical support near $87, where buying activity has historically intensified. A failure to hold the $96 level could open the path toward a more extended correction, while a confirmed breakout above $115 would likely catalyze a rally toward $130 in the medium term.
Huawei's AI chip development and U.S. export restrictions
The market environment surrounding Nvidia has turned notably more cautious following reports that China's Huawei Technologies is preparing to launch an advanced AI chip. This development comes at a sensitive time when U.S. government restrictions have already hampered Nvidia's ability to export its most powerful AI processors, such as the H20 series, to China.
China remains one of Nvidia's largest and fastest-growing markets, especially for AI and data center applications. Losing competitive ground to a major domestic rival like Huawei could pose a substantial risk to Nvidia’s revenue streams in the region. Huawei’s initiative is partly motivated by the broader push within China to achieve technological self-sufficiency in the wake of escalating geopolitical tensions.
Meanwhile, the broader semiconductor sector has also been hit by concerns of oversupply in certain areas and fluctuating demand expectations for AI hardware. Nvidia’s leadership in the AI GPU market remains unmatched for now, but growing threats from both Chinese firms and Western competitors mean that the company's market dominance is likely to face increasing challenges in 2025 and beyond.
Potential for rebound if resistance is breached
Looking ahead, Nvidia’s stock price trajectory will largely depend on whether it can overcome technical resistance at $115. A breakout above this level, accompanied by strong volume, would be a positive signal that could drive the stock back toward the $130 range, where additional technical resistance is found.
Conversely, if Nvidia continues to struggle below $115 and loses support at $96, the next logical target would be $87. A breakdown below $87 would indicate a deeper correction phase and could trigger additional technical selling. For now, traders should watch for price action cues around the $108-$115 band to gauge short-term momentum.
Despite a favorable market environment, regulatory risks cloud Nvidia’s growth prospects. The upcoming "AI Diffusion Rule," effective May 15, 2025, could slash Nvidia’s annual sales by up to 10% and earnings per share by around 11%, according to BofA Securities analysts.
