The NVIDIA stock price is in the spotlight as concerns about its Chinese business continues. NVDA is hovering at a record high of $182, bringing the year-to-date gains to 30%, and pushing its market capitalization to over $4.35 trillion. It has jumped by 110% from its lowest point this year.

China sours on NVIDIA chips

The NVIDIA share price rose on Monday even after more details about its Chinese business emerged. 

NVIDIA, in a bid to secure access to the world’s biggest market, agreed to pay 15% of its Chinese revenue to the US government, an effective export tax that will cost it billions over time. This new levy is in addition to the taxes it already pays to the US. 

That report came as the media reported that China was still critical of NVIDIA’s chips. Officials are concerned that its chips have backdoor access to the United States. 

NVIDIA has vehemently rejected the claim, even as US officials push for it to have some location data to help control illicit sanctions violations. 

Now, according to Bloomberg, China is pushing local companies not to use NVIDIA’s H20 chips, especially on government devices. This new guidance is rooted on two main reasons. 

First, China is concerned that NVIDIA and AMD chips could have a backdoor access, allowing the US government and its security agencies to track and invade privacy. 

Indeed, the Select Committee on the Communist Party of China is deliberating a bill to mandate location tracking on all advanced chips to reduce smuggling.

Second, China’s goal is to boost local capabilities as it believes that the H20 chips are not advanced enough. This includes supporting companies like Huawei and SMIC, which have continued to gain market share.

The other notable news came from the United States, where the Trump administration is considering allowing the sale of advanced GPUs to the Chinese market. 

Strong demand remains

Still, in the long term, it remains unclear whether these developments will have a lasting impact on NVIDIA. Recent indications are that the company has strong demand as the AI boom continues. 

For example, Microsoft has committed to spend about $30 billion in capital expenditure, with most of this funding going to NVIDIA. Microsoft accounts for almost 20% of all NVIDIA sales. 

Other hyperscalers like Google, Meta Platforms, and Amazon are also boosting their spending. Altogether, these top companies will spend nearly $400 billion in AI this year, benefiting NVIDIA and AMD. 

That is a sign that the AI bubble is not about to burst. However, there is still concerns on how the hyperscalers will recoup their investments over time. Anthropic, the creator of Claude, is expected to make between $3 billion and $9 billion this year, while OpenAI will make about $12 billion. 

The next important catalyst for NVIDIA is the upcoming earnings later this month. These results will provide more details about the company and whether its business was still growing.

NVIDIA stock price analysis

NVDA stock chart | Source: TradingView

The daily timeframe chart shows that the NVIDIA share price has been in a strong rally this year and is now sitting at its all-time high. It has already moved above the important resistance level at $152, the highest level on January 7.

The risk, however, is that the stock has formed a rising wedge, which is made up of two converging trendlines. It has also formed a bearish divergence pattern as the Relative Strength Index (RSI) and the MACD have continued falling.

Therefore, the stock will likely have a bearish breakdown, with the next point to watch being at $152, down by 16% from the current level. 

The post NVIDIA stock price forecast as fresh China headwinds rise appeared first on Invezz