Nvidia Shares Face Headwinds Amid Conflicting Market Signals

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Nvidia's stock found itself caught in a crosscurrent of opposing forces during Thursday's trading session. While the company received a significant regulatory green light from the U.S. government, broader sector weakness exerted downward pressure. In pre-market activity, the share price declined to a range of $178 to $181, marking a drop from the previous day's closing price of $183.78.

The immediate catalyst for the decline appeared to stem from outside the company. Oracle's stock plummeted by over 10% following a disappointing revenue report, dragging down the broader artificial intelligence sector. Market experts noted that many investors overlooked a critical detail within Oracle's announcement: the software giant has increased its capital expenditure forecast for fiscal 2026 to $50 billion. This substantial investment is earmarked for data center infrastructure, a significant portion of which is expected to flow directly to hardware providers like Nvidia.

U.S. Grants Conditional Export Approval for H200 Chips to China

On December 11, President Donald Trump officially authorized Nvidia to sell its H200 AI chips to approved customers in China. This regulatory clarity, however, comes with notable constraints. A 25% export tariff will be applied, substantially increasing the cost of these transactions for Chinese buyers. Furthermore, the most advanced next-generation chips, specifically the Blackwell B200 and the upcoming Rubin series, remain under a strict export ban due to national security concerns.

Analysts at UBS estimate the Chinese AI chip market will reach $50 billion by 2025. Currently, domestic manufacturers such as SMIC can only meet approximately 20% of the local demand for AI processors. This leaves a gap of roughly $40 billion, which Nvidia could partially address with its H200 products. Major Chinese tech firms, including Alibaba and ByteDance, have reportedly already applied for the necessary licenses.

Concurrently, Nvidia is implementing a new software tool designed to verify the physical location of its graphics processing units (GPUs). This initiative targets smuggling networks that have recently drawn scrutiny from U.S. authorities. The company clarified that the software does not include a "kill switch," meaning Nvidia cannot remotely disable hardware that has already been sold.

Analyst Sentiment Remains Bullish on Long-Term Prospects

Despite the near-term stock price volatility, major financial institutions reaffirmed their confidence in Nvidia. UBS maintained its "Buy" rating with a price target of $235, viewing the conditional China access as a key catalyst, even if the tariff impacts profit margins. Bank of America offered an even more optimistic outlook. Analyst Vivek Arya reiterated his $275 price target and continued to label Nvidia a "Top Pick," stating the company remains "a full generation ahead" of its competition. He emphasized high visibility on potential revenue of $500 billion from Blackwell and Rubin systems by 2026.

Technical Analysis Points to Key Price Levels

From a chart perspective, the stock is navigating a complex short-term environment. The regulatory certainty regarding China is viewed as a fundamental positive, yet fears of an "AI bubble," amplified by Oracle's results, are creating headwinds. In pre-market trading, the stock tested a key support level around $175. Maintaining this price point is considered technically crucial. Immediate resistance is seen in the $190 to $195 range. Market strategists suggest that if investors move past the Oracle news and refocus on the increased investment budgets from hyperscale cloud providers, the primary analyst target of $200 per share remains within reach.