Usman Salis
Wall Street's AI champion is facing unexpected turbulence. Nvidia (NVDA) stock took a significant hit on Tuesday morning as news emerged that China plans to restrict its domestic companies from buying the chipmaker's advanced processors. This development has rattled investors and brought geopolitical concerns back into focus for one of the market's most celebrated growth stories.
Stock Performance Under Pressure
Nvidia shares (NASDAQ: NVDA) dropped 2.73% to $170.11 as of late morning, extending early session declines. The selloff followed reports confirming China's intention to ban local firms from purchasing Nvidia's cutting-edge chips, potentially affecting one of the company's most important international markets. According to The Kobeissi Letter, this news has already created ripples of concern among investors about future sales prospects in the region.
Traders now await Nvidia’s next earnings report for clearer insight into the potential impact of these restrictions..
Technical Picture Shows Clear Weakness
The intraday chart reveals a sharp drop from the $172-174 range, with the stock breaking below its previous close of $174.88. Nvidia hit a morning low of $170, which now serves as immediate support. Key levels include $170 as critical support - if this breaks, the next target could be $165. On the upside, any recovery faces resistance at $172.50, with the $175 zone presenting a stronger barrier. The downward momentum appears driven more by headline concerns than fundamental technical weakness.
Implications for Investors
Nvidia has been the standout winner of the AI revolution, with its graphics processing units powering everything from major data centers to advanced AI systems. However, China's restrictive measures threaten a substantial chunk of international revenue. While the company maintains its dominant position in global AI chip markets, analysts warn that increased export controls and rising geopolitical tensions could dampen near-term growth expectations. Investors are now grappling with whether U.S. officials might implement additional export restrictions, how effectively Nvidia can compensate for lost Chinese demand through expanded U.S. and European partnerships, and whether sustained AI demand from major technology companies will continue to outweigh political headwinds.
Looking Ahead
Nvidia's immediate path depends heavily on the scope and impact of China's ban. If selling pressure continues, a test of $165 support looks probable. Conversely, a swift recovery above $175 would help restore market confidence and signal resilience against geopolitical challenges.
Usman Salis
