Nvidia (NVDA) Faces $5 Billion Sales Loss – Capital Street FX
01 Nov 2023
Due to recent export restrictions, the stock of Nvidia (NVDA) may experience a potential drop of 18%, reaching a price of $328.
- Nvidia faces the possibility of missing out on over $5 billion in sales to China.
- The Wall Street Journal reports that the export controls on AI chips by the Biden administration are already in place.
- Additionally, NVDA stock has breached the neckline of a head-and-shoulders chart pattern.
NVidia’s (NVDA) stock has breached the neckline of its head-and-shoulders pattern on the daily chart, indicating a potentially significant drop of 18%, with a target around $328.
This pattern’s likelihood of materializing has increased in light of mounting pressure on NVDA stock after a report from the Wall Street Journal suggested that the Biden administration’s export controls may restrict over $5 billion in Nvidia chip sales to China.
On Tuesday, The Wall Street Journal reported that President Joe Biden’s administration informed Nvidia officials that the export restrictions previously announced for advanced chips used in AI applications, including NVidia’s A100 and H100 GPUs, were immediately implemented. Executives familiar with the situation revealed that Nvidia had intended to ship its orders for next year to Chinese customers in mid-November, aiming to get ahead of the new regulations. However, this move could potentially result in a loss of over $5 billion in sales in 2024.
In response to this news, NVidia’s stock dropped by more than 2% on Tuesday, causing it to lose its trillion-dollar market capitalization. Earlier this year, Nvidia achieved the $1 trillion milestone when its revenue guidance surged due to a significant increase in orders related to the generative AI industry.
NVIDIA TECHNICAL ANALYSIS DAILY CHART:
Nvidia is currently trading within a down channel.
Nvidia is positioned below all Moving Averages (SMA).
The Relative Strength Index (RSI) is in the neutral zone, while the Stochastic oscillator suggests a neutral trend.
Immediate Resistance level: 420.84
Immediate support level: 400.18
HOW TO TRADE NVIDIA
After a notable surge, NVidia’s price experienced a decline and entered a downward channel. While making an attempt to move upwards from a support area, NVidia’s stock encountered resistance, leading to multiple rejections and a subsequent decline. Presently, the stock has formed a head and shoulders pattern and is trading near a critical support zone. A breach of this zone may lead to further declines.
TRADE SUGGESTION- STOP SELL – 395.66, TAKE PROFIT AT- 346.59, SL AT- 431.82.