Recent regulatory developments from the White House have notably impacted Nvidia’s (NASDAQ: NVDA) stock and the broader semiconductor sector.
Nvidia, in particular, lost its $120 support zone after it emerged that the Joe Biden administration plans to implement safeguards around advanced artificial intelligence (AI) models, like those used in ChatGPT. This move adds to the tightening of controls in 2023 aimed at preventing advancements in supercomputing technologies that could benefit China’s military.
Expectations are that the U.S. will maintain pressure on semiconductor export restrictions and seek further limits from the Netherlands and Japan on chipmaking equipment destined for China.
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Notably, the development resulted in Nvidia recording a sustained session of losses, with the stock trading at $118 by the close of markets on July 20. This valuation reflected a 24-hour loss of over 2%, while on the weekly chart, the stock is down over 6%.
It has now emerged that Nvidia is reportedly developing a version of its flagship AI chips for the Chinese market that complies with U.S. export controls. This development will likely impact Nvidia’s share price in the coming months.
AI predicts NVDA share price
To gauge how the stock might perform in light of these changes, Finbold consulted OpenAI’s most advanced AI tool, ChatGPT-4o, for insights on Nvidia’s potential trading trajectory by the end of Q3.
ChatGPT-4o acknowledged that introducing AI chips tailored for China could alleviate some investor concerns about regulatory constraints. Despite these challenges, the market’s perception that Nvidia can sustain and even grow its presence in China could bolster investor confidence.
The AI tool noted that Nvidia’s launch of these chips, while adhering to U.S. export regulations, is a strategic success. Compliance with rules while tapping into the Chinese market positions Nvidia favorably for future regulatory challenges.
However, Nvidia’s stock performance will also be influenced by broader semiconductor trends, including supply chain stability, technological advancements, and global economic conditions. As the industry evolves, Nvidia’s ability to innovate and adapt will be crucial for its success.
NVDA’s potential scenarios
ChatGPT-4o provided three potential scenarios for NVDA stock price based on the market’s reaction to the new AI chips. In the first scenario, if the market reacts positively, Nvidia’s share price could significantly increase, potentially ranging between $130 and $140. This scenario assumes that the AI chips are well-received, demand is high, and Nvidia complies with regulations.
In the second scenario, if the unveiling of the AI chips is seen as a necessary but expected move, Nvidia’s share price might stabilize or experience modest gains. This outcome would likely place the share price between $120 and $130.
In the third scenario, if broader concerns about regulatory pressures, supply chain issues, or economic conditions overshadow the unveiling, Nvidia’s stock price might exhibit volatility or limited gains. This conservative estimate suggests a share price range of $110 to $120.
Given Nvidia’s strategic launch of its AI chips for China, its share price by the end of Q3 2024 is projected to fall between $120 and $130, assuming a moderate market reaction and continued regulatory compliance. A particularly positive market reaction could see the share price approaching the higher end of this range.
This prediction comes as Nvidia’s stock is under scrutiny after losing the $120 support level. Given Nvidia’s central role in the S&P 500 index’s performance, further declines could affect the broader stock market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
