Nvidia's Two-Front Battle: A Samsung Strike Threatens Supply Just as a China Door Creaks Open

Nvidia's $5.7T record week ended with profit-taking. A Samsung strike threatens HBM supply, and China revenue falls to zero. Earnings on May 20 are key.

Nvidia ends a record-shattering week with a foot on the brake and an eye on the clock. The AI chip leader briefly touched a market capitalization of nearly $5.7 trillion — overtaking silver in value — before profit-taking on Friday sent shares sliding 3.56% in Frankfurt to €193.90. The weekly gain of 6.19% underscores just how much momentum is still behind the stock, but two converging risks could test that stamina: a looming strike at a critical memory supplier and a China market that has gone from cash cow to zero overnight.

Samsung Walkout Looms Over HBM Supply

Workers at Samsung Electronics are preparing to walk off the job starting May 21. For Nvidia, that date is more than a labor dispute in Seoul — it threatens the flow of high-bandwidth memory (HBM) that is essential for its AI accelerators. HBM remains one of the tightest links in the production chain, and any disruption could nudge the timelines of upcoming platforms like the next-generation Rubin architecture. Nvidia is already running its foundry networks at full tilt, and the Blackwell line is ramping globally. Added pressure from a strike would arrive at the worst possible moment.

China's Fragile Reopening

The rally earlier in the week was mostly political. The US administration reportedly gave around ten Chinese companies — including Alibaba and Tencent — permission to buy Nvidia's H200 AI chips. The stock surged 4.4% on Thursday to a fresh yearly high, amplified by Jensen Huang's attendance at a high-level US-China meeting in Beijing. Yet the actual chips have not been delivered, and the optimism may be premature.

Huang himself painted a stark picture of the reality. On April 30 he said Nvidia's direct market share in China had fallen to zero, down from more than 90% globally in earlier years. Bernstein had already forecast a collapse from 66% in 2024 to roughly 8% last year. The figures from Nvidia's last fiscal year told the story: $19.67 billion in revenue from China including Hong Kong. In the coming quarter, management plans to generate zero revenue from the region.

Commerce Secretary Howard Lutnick blames Beijing's industrial policy for steering investment toward domestic chip production. Tencent and Alibaba are both expanding their use of homegrown semiconductors. Even if export rules ease, the customers Nvidia once counted on may no longer be interested. Huawei, for instance, plans to more than double production of its Ascend 910C chip this year to 600,000 units.

A $170 Billion Wipeout and the Numbers Ahead

The market's schizophrenic reaction to the China story was on full display in the US. On May 14, Nvidia closed at a record $235.74. One day later, the stock dropped more than 4.6%, erasing roughly $170 billion in market value. The whipsaw reflects just how sensitive the valuation is to any hint that the China door might not stay open for long.

All eyes now turn to earnings after the close on May 20. Nvidia guided for first-quarter fiscal 2027 revenue of $78 billion, plus or minus 2%. Wall Street consensus sits a touch higher at $78.8 billion, with adjusted earnings per share of $1.77. Revenue would still be up 78% year over year. The unofficial watchpoints are threefold: the ramp of Blackwell Ultra, the debut timeline of Vera Rubin, and whether gross margins can hold near 75% on an adjusted basis. Nvidia generated $97 billion in free cash flow last year, and the question is how much pricing power it retains in the next product cycle.

On the demand side, the megacap cloud spenders — Microsoft, Amazon, Alphabet and Meta — are expected to pour roughly $725 billion into capital expenditure in 2026, an increase of about 77% from the prior year. That flood of investment keeps the long-term thesis intact, but the near-term risks are piling up.

Technicals and Sentiment

Despite Friday's pullback, the technical picture remains constructive. Nvidia trades well above its 50-day moving average of €165.17 and the 200-day average of €159.02, keeping the uptrend intact. The relative strength index has dropped to 57.3, indicating that the stock is no longer overbought. The recent high of €201.05 serves as a near-term ceiling, and traders are watching that level closely.

Of the 60 analysts tracked by consensus, 48 rate the stock a buy. The average Wall Street price target is $269.95. That upside is driven by the belief that the AI accelerator boom has years left to run, but it leaves little room for slip-ups on execution. Inflation data released Friday showed sticky price pressures, reinforcing expectations that the Federal Reserve will keep rates elevated well into 2027. That macroeconomic headwind is seldom friendly to growth stocks trading at premium multiples.

Nvidia enters its earnings report navigating a narrowing tightrope: a supply chain vulnerable to a Samsung strike, a China market that has flipped from pillar to zero, and a constellation of capex commitments that justify the valuation only if every piece falls into place. The numbers on May 20 will tell the market whether the rope is about to slacken or snap.