TLDR:
- Nvidia stock gained 1.3% in premarket trading Tuesday after falling 4.5% Monday
- Amazon AWS pushed back on reports it was delaying data center expansions
- Trump administration’s new restrictions banned Nvidia’s H20 chip sales to China
- Nvidia will take a $5.5 billion charge due to these export restrictions
- Huawei plans to mass ship its 910C AI chip next month, potentially matching Nvidia’s H100 performance
Nvidia’s stock showed signs of recovery Tuesday morning after taking a hit the day before. The chip giant, which has become synonymous with AI computing, is navigating both reassuring news from a major customer and growing challenges from China.
Nvidia shares were up 1.3% at $98.20 in premarket trading on Tuesday. This comes after the stock fell 4.5% on Monday amid concerns about cloud providers pulling back on AI infrastructure investments.
The initial drop came following reports that Amazon’s AWS cloud business had delayed several new data center leases. Some analysts at Wells Fargo suggested this followed similar moves by Microsoft.
However, late Monday, Kevin Miller, vice president of global data centers at AWS, posted on LinkedIn to clarify the situation. “This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans,” Miller wrote.
Research firm TrendForce suggested these shifts likely reflect internal resource reallocation rather than reduced investment. But they also noted that growing geopolitical tensions could prompt more cautious spending.
China Complications Intensify
Beyond the Amazon news, Nvidia is dealing with significant headwinds from the Trump administration’s new restrictions on selling AI chips to China. These restrictions are already having a financial impact.
Nvidia disclosed in a recent 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. The ban was announced just last week.
The situation has created an opening for Chinese tech companies. Reports indicate that Huawei plans to begin mass shipments of its advanced AI chip, the 910C, as early as next month.
This development highlights China’s efforts to bypass U.S. tech restrictions. Huawei’s move could allow it to capture market share that Nvidia is forced to abandon.
The 910C GPU reportedly matches the performance of Nvidia’s H100 by using advanced integration methods. It combines two 910B processors into one package to achieve comparable computing power.
Market Impact and Outlook
Jefferies analysts pointed out that the new export rules may ultimately help Chinese chipmakers. The restrictions could push domestic buyers in China to shift away from U.S. suppliers like Nvidia.
Year-to-date, Nvidia stock has declined by 27%. This represents a sharp turnaround for a company that had been the poster child of the AI boom in recent years.
The combination of tariffs, China restrictions, and broader economic concerns has created a more challenging environment for the chip maker. With these issues mounting, uncertainty around the stock has grown.
Despite these near-term challenges, many analysts remain optimistic about Nvidia’s future prospects. According to TipRanks data, NVDA stock has a Strong Buy consensus rating based on 37 Buys and five Hold ratings.
The average share price target sits at $169.30, which would represent a 75% upside from current levels. This suggests that Wall Street still believes in Nvidia’s long-term growth story despite the present hurdles.
Other chip makers also showed signs of recovery in Tuesday’s premarket trading. Advanced Micro Devices was gaining 1% while Broadcom was rising 1.4%.
