Nvidia share price declined in Monday’s pre-market trading in reaction to reports that China’s government is sustaining its pressure on local companies to use GPUs made by Chinese manufacturers. Nvidia (NASDAQ: NVDA) was down by 1.3 percent in the session, trading at $123.44. The stock made significant gains last week, propelled by news of upbeat demand for its Blackwell GPU chips.
China and the United States are embroiled in a trade war that has seen the latter limit the former’s access to advanced microchips and equipment used to manufacture them. In response, China has been pushing local manufacturers to developed their own domestic capacity to keep up with the rising demand for AI-driven chips.
A prolonged trade war between the US and China will likely limit Nvidia’s revenue growth and suppress profit margins. However, the demand for the company’s AI chips remains strong, and CEO Jensen Huang sparked upbeat momentum last week when he described the demand for Blackwell GPU chips as “insane.” That is quite impressive for equipment going for $30k—$40k a piece.
Leading tech companies including Microsoft, Meta, Oracle, Amazon and Alphabet are engaged in stiff competition in setting up AI-centric data centers and that augurs well for Nvidia’s revenue. The positive sentiment following Huang’s recent comments will likely keep Nvidia share price on the upside in the near term above the psychological $120 mark. The stock gained 5 percent in the last week and that sets up a strong potential for bullish control.
Nvidia share price is likely to head up if the action stays above the 123.70 pivot mark. With the bulls in control, initial resistance could come at 124.25. However, a sustained push could enable a break above that level and potentially advance further to test 124.90.
Conversely, a move below 123.70 will signal control by the sellers, with the first support likely to come at 123.00. In addition, if the downside momentum breaks below that level, it will invalidate the upside narrative. Also, it could extend the decline to test 122.35.
This post was last modified on Oct 07, 2024, 12:29 BST 12:29