Nvidia (NVDA) stock is currently grappling with significant challenges as it navigates the implications of export controls on AI chips imposed by the Biden administration. These obstacles have the potential to cause a decline of approximately 18% for the stock, with market experts speculating that the stock may reach levels close to $328.
Implications of Export Controls on Nvidia
The export controls on AI chips implemented by the Biden administration have raised concerns about Nvidia’s chip sales to China. This could result in a revenue loss of over $5 billion for the company. Initially, Nvidia had planned to deliver next year’s orders to Chinese customers before the newly imposed regulations took effect. However, with the export restrictions now in place, Nvidia faces the possibility of a significant drop in sales for 2024.
Impact on Nvidia’s Stock Price
Unsurprisingly, investors have reacted with apprehension to this news. Nvidia’s stock price has already experienced a decline of over 2% and has lost its trillion-dollar market cap. Earlier this year, the company achieved the impressive milestone of reaching a $1 trillion market cap due to increased orders related to generative AI. These orders played a major role in the company’s strong revenue guidance.
Looking Ahead: Advanced Micro Devices (AMD)
Investors are eagerly awaiting the upcoming earnings report from Advanced Micro Devices (AMD), which will be released after the market closes on Tuesday. Analysts predict that AMD will report earnings of $0.68 per share on $5.69 billion in sales. This report will provide further insights into the current state of the semiconductor industry and could have implications for Nvidia’s future performance.
Analyzing Nvidia’s Chart Pattern
Upon analyzing Nvidia’s daily chart, a clear head-and-shoulders pattern is evident. This technical pattern, characterized by a peak (the “head”) between two smaller peaks (the “shoulders”), typically signals a bearish trend. In this case, the projected price target for the pattern indicates a potential downward movement of $87, with the stock’s price stabilizing around $328.
While Nvidia faces challenges due to the impact of export controls on AI chips, investors are awaiting AMD’s earnings report for potential insights into the semiconductor industry. Additionally, the head-and-shoulders pattern on Nvidia’s chart suggests a potential decline in the stock’s price. Despite these obstacles, Nvidia remains a significant player in the market, renowned for its high-value chips utilized in generative AI workloads.