Nvidia chips prohibited by China - Dow Jones stock facing closure
Nvidia, the American technology company known for its high-performance graphics processing units (GPUs), is currently facing a series of challenges. The stock market's central resistance for Nvidia's shares is around the $180 mark, but the company is grappling with several issues that are causing a downturn.
Beijing's aim to make the domestic market more independent and less reliant on foreign developments has led to a ban on Nvidia chips. This ban targets Alibaba and ByteDance, two of China's largest consumers of high-performance chips for training AI models. The ban on Nvidia's chips is another signal that Beijing is deliberately isolating the market, adding to the challenges for Nvidia's stock.
The RTX Pro 6000D, a variant of Nvidia chips tailored for the Chinese market, is specifically affected by the ban. Weak demand in China and the sales ban for stripped-down models like the RTX Pro 6000D are contributing to the difficulties faced by Nvidia's stock.
The trade conflict between the U.S. and China continues to weigh on Nvidia, slowing its growth. This conflict, which has been ongoing for some time, is causing political tensions. The Republican House Speaker Mike Johnson has labeled China as the "adversary" of the U.S.
Nvidia faces this decision at a delicate time, as Beijing accused the company of antitrust violations in the Mellanox acquisition last Monday. Despite these challenges, Nvidia remains leading in AI, an advantage that should be reflected in the long-term stock price.
Citi has downgraded Nvidia's target price, and the company's shares are currently down around one percent, making them the weakest Dow component in a stable market. However, corrections in Nvidia's stock offer entry opportunities for investors who believe in the company's long-term potential.
Nvidia's CEO, Jensen Huang, has expressed disappointment but understands the geopolitical dimension of the ban. AI-related topics such as the potential bubble bursting are being discussed in relation to Nvidia, but the company's strong position in the AI market suggests that it may weather this storm.
Leading Chinese providers, including Huawei, Alibaba, and ByteDance, are working on strengthening technological sovereignty with their own accelerators and memory solutions. This move is aimed at reducing dependence on US suppliers such as Nvidia. The publication has a conflict of interest as the board member and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, holds positions in Nvidia.
Despite the current challenges, it's worth noting that year-to-date, Nvidia's stock has increased by 27.2 percent. The 50-day line at $174.82 dollars is the first important support for Nvidia's stock, followed by $155.00 (GD100) and $140.34 (GD200). As the situation evolves, it will be interesting to see how Nvidia navigates these challenges and whether the market will continue to support the company in the long term.
