Nvidia (NVDA) kicked off the week with a significant setback, as its stock plunged over 4% on Monday. The decline follows the Trump administration’s new restrictions on selling AI chips to China, which continues to weigh on investor sentiment. The situation intensified as China’s Huawei appeared poised to fill the gap left by Nvidia’s cutting-edge technology, raising further concerns among investors.
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For context, the Trump administration banned sales of its H20 chips to China last week. Consequently, Nvidia disclosed in a filing that it will take a $5.5 billion charge due to these new export restrictions on its H20 chips to China and other regions.
Chinese Rivals Poised to Seize Nvidia’s Market Share
In the latest setback for NVDA stock, reports on Monday revealed that Huawei plans to begin mass shipments of its advanced AI chip, the 910C, as early as next month. This move highlights China’s efforts to bypass U.S. tech restrictions, with Huawei potentially benefiting from the crackdown on Nvidia. Notably, Huawei’s 910C GPU reportedly matches the performance of Nvidia’s H100 by using advanced integration methods to combine two 910B processors into one package.
Meanwhile, Jefferies analysts also pointed out that the new export rules may ultimately help Chinese chipmakers by pushing domestic buyers to shift away from U.S. suppliers.
Nvidia’s Steep Discount Fails to Lure Cautious Investors
Year-to-date, NVDA stock is down by 27%. Nvidia has seen massive investor enthusiasm in recent years, being the poster child of the AI boom. However, Nvidia now faces mounting risks that makes investors think twice before buying the dip.
Experts believe that the company’s outlook isn’t as strong as before, weighed down by tariffs, China, and the overall economy. With these challenges stacking up, uncertainty around the stock has grown significantly.
What Is the 12 Month Price Target for Nvidia?
Despite near-term headwinds, analysts remain firmly optimistic about Nvidia’s long-term growth story. On TipRanks, NVDA stock has a Strong Buy consensus rating based on 37 Buys and five Hold ratings. At $169.30, the Nvidia average share price target implies a 75% upside potential.