New US licensing requirements increase pressure on NVIDIA stock

On Tuesday, NVIDIA announced that it will incur approximately $5.5 billion in costs related to US export restrictions. Following the news, NVIDIA (NVDA) shares fell more than 6%. However, the stock ended the day higher, closing at 112. 

The same day, NVIDIA announced that it would have to obtain new licenses to export its chips to China and a number of other countries. That made the H20 chip, designed specifically to comply with previous US export restrictions, no longer eligible for sale, leading to massive asset write-downs and causing investor concern. With China being NVIDIA’s fourth largest sales region, these restrictions could have a significant impact on the company’s earnings. Increased competition from Huawei and other Chinese companies also complicates NVIDIA’s position.

NVIDIA stock is already down 16% this year, partly due to President Trump’s announced tariffs on imports from key trading partners. While semiconductors have been removed from the list of goods subject to increased tariffs, the Trump administration has stated that this is a temporary measure.

Despite the ongoing challenges, NVIDIA has announced plans to build up to $500 billion worth of AI servers in the US over the next four years in partnership with TSMC, Foxconn and Wistron. This is expected to strengthen the domestic supply chain. The move could be a response to pressure from the Trump administration to bring high-tech manufacturing back to the US.

Technical analysis suggests that the bearish sentiment in the market remains in place. The price is below the moving average line (MA 50), indicating that the downtrend is still ongoing. MACD is trending negative, although the difference between the main line and the signal line has been decreasing in recent days. The RSI value is 47, which falls in the neutral zone, but given the general decline in price, this could be a harbinger of a further drop.

Current recommendation:

Sell at current price. Take Profit — 105. Stop Loss — 116.70.