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Key Insights
- NVIDIA stock price retreated amid new Chinese headwinds.
- The company will be forced to share its Chinese profits with the US.
- China is concerned about its chips having backdoors to the US.
NVIDIA stock price pulled back by over 1% in the premarket session as market participants reacted to crucial China-related news. NVDA dropped to $181, down slightly from the all-time high of $183.62. This article explores whether this pullback is the start of a downward trend or just temporary.
This analysis explores whether NVDA price pullback is the start of a downward trend or just temporary.
NVIDIA Stock Price to 15% of China Sales to the US Government
The NVDA stock price retreated after details of its deal with the United States government emerged. The company, the world’s largest manufacturer of GPUs, will share its Chinese revenue with the US government.
This arrangement, which also will affect AMD, emerged after the Donald Trump administration allowed them to start shipping these products to China. It is also the first time that the US government has made such an arrangement.
The 15% profit share will have a major impact on NVIDIA’s profitability. For example, the last annual report showed that China sales in 2025 totalled about $17.1 billion, representing 13% of its total results. Its H20 chips made $4.8 billion during the year.
NVIDIA stock price also dropped after a Chinese state media outlet warned that the company’s chips were not safe. The paper warned that the chips could have backdoors to the United States and that they were not advanced enough.
The report followed China’s state regulators’ continued investigation into potential backdoors. In a statement, NVIDIA has denied that the H20 chips, which are developed for the Chinese market, have any backdoors or issues.
Strong Demand in the AI Data Center Space
These reports came as recent reports showed there was substantial demand in the artificial intelligence (AI) industry.
Most AI hyperscalers have published strong financial results recently and committed to accelerating their investments. Its Intelligent Cloud division’s revenue rose by 21%, driven by Azure. It has committed to invest over $30 billion in its capital expenditure this year.
Amazon has also continued to boost its spending, following its increase in Capex to $31.4 billion in the second quarter. As the AI boom continues, it plans to spend over $100 billion in data centers this year.
Other top companies, such as Meta Platforms, Oracle, and Google, are also investing heavily as they all seek to gain market share in the AI industry. These investments will benefit NVIDIA as it is the biggest provider of GPUs.
Looking ahead, CoreWeave and Applied Materials will publish their results this week and provide more information about the AI space. CoreWeave is a top company that operates data centers, providing it solutions to hyperscalers. In its recent results, it said that it would spend over $23 billion in capital expenditure this year, most of which will go to NVIDIA.
Its recent results said it would spend over $23 billion in capital expenditure this year. Most of that will go to NVIDIA.
Applied Materials will also publish its financial results on Thursday. While it is not a big NVIDIA customer, its results will provide more details about the data center space, where it supplies several products like DRAMs.
NVIDIA stock price will also react to its financial results scheduled for later this month. According to Yahoo Finance, analysts anticipate the upcoming results to show that its revenue jumped to $45.7 billion in Q2 even though it did not ship the H20 chips to China.
NVIDIA Stock Price Technical Analysis
The daily timefame chart shows that the NVDA stock price has continued its strong rally in the past few months. It recently crossed the important resistance level at $152, invalidating a triple-top pattern that was forming.
The stock has continued to remain above the 50-day and 200-day moving averages of $160 and $135, respectively. The MACD and the Relative Strength Index (RSI) have formed a bearish divergence pattern.
This divergence happens when an asset is rising while the oscillators are forming lower lows.
Therefore, there is a risk that the NVIDIA stock price will drop and retest the support at $152 and then resume the uptrend. This price action is known as a break-and-retest and is a common continuation sign.
