Nvidia stock was higher by 143 year-to-date despite recent losses, which have shed 13% from the highs.
NVDA stock was trading at the $120.20 level on Thursday, but this could be a near-term low after recent selling. The $118.36 level is providing the barrier to further selling.
Two stories rocked the chipmaker industry this week. Firstly, the Biden administration is considering stricter rules on exporting chips and equipment to China. They could even invoke a rule that prevents foreign-made products with even the smallest amount of US technology from being sold to Chinese customers.
Meanwhile, former President Donald Trump shared some fierce rhetoric about Taiwan. He said the island nation took “about 100%” of the American chip business and that “Taiwan should pay us for defence“.
That raised fears that the Trump administration would be unwilling to defend Taiwan’s independence in the event of an invasion by China.
According to the US International Trade Commission, around 92% of the world’s most advanced chipmaking capacity is in Taiwan. Any Chinese invasion would be a considerable risk to the semiconductor sector. After a big AI-driven surge in US stocks, it would also threaten the entire stock market.
The threat would also be challenging for Nvidia, which makes $10.3bn in revenue from its China business, or 17% of annual revenue. Any adverse outcome would also hurt growth expectations and valuations. Despite the restrictions, the firm is expected to generate more revenue from China this year.
The price of Nvidia is now looking for support at current levels. The broader market could play a big part in whether buyers arrive or the stock takes another leg down.