After appearing to be on the verge of a new record high, Nvidia’s (NASDAQ: NVDA) stock price is showing weakness, stemming from reactions to a possible policy change that could impact the company’s future outlook.
The NVDA share price is struggling to maintain its valuation above the $130 support level, just a day after the equity attempted to breach the $140 resistance. As of press time, Nvidia was trading at $130, down over 5%. These losses have extended on Nvidia’s weekly chart, where the equity is down 2.5%.
Why is NVDA stock down
Nvidia’s stock appears to be reacting to news that the U.S. government may restrict the sale of advanced AI chips to certain countries. Reports indicate that the White House is considering capping export licenses for AI chips—primarily those made by Nvidia—to the Middle East, citing national security concerns.
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Earlier this year, the Biden administration discussed slowing down license approvals for Nvidia and other U.S. chipmakers exporting large-scale AI accelerators to the region.
Amid the current stock correction, some market players believe that there is no need for alarm, as the momentum does not signal a sell-off. For instance, analyst Rita Lawrence observed in an X post on October 15 that the sudden drop in NVDA’s share price appears inconsistent with the volume profile.
When such significant downward movements occur, corresponding volume spikes typically signal a broader sell-off. However, despite the visible price dip, the volume remains relatively muted in this case.
Lawrence pointed out that if this were a genuine sell-off, the drop would have been more severe, potentially around 10%. This discrepancy suggests that other factors, such as temporary market reactions, could be in play rather than widespread selling pressure.
What next for NVDA stock price
It is worth noting that Nvidia’s stock movement in the last 24 hours mirrors its performance in recent months, during which the equity experienced notable volatility and significant capital swings.
For instance, back in August, the stock faced the threat of sustained losses below the $100 mark after it emerged that the company would be delaying the rollout of its next-generation Blackwell chips due to design flaws.
One of the general consensuses in the market is that Nvidia is likely to see more upside in the coming months, citing the impact of the Blackwell chips and the company’s role in the AI space. In this case, Citi (NYSE: C) analyst said Nvidia is “still king” in the AI accelerator market, setting a price target of $150 with a ‘Buy’ rating.
The bank’s expert, Atif Malik, based his projection on the coexistence of GPUs and ASICs in building AI infrastructure. Goldman Sachs (NYSE: GS) also set a target of $150 for the technology giant’s potential to capitalize on the expanding computing requirements associated with more sophisticated AI models.
Indeed, anticipation around Blackwell was elevated by comments from Nvidia CEO Jensen Huang, who said the chip “is in full production” and that demand for it “is insane.”
In this regard, Phil Panaro, a former senior advisor at the Boston Consulting Group, opined that the chips will be Nvidia’s new cash cow, projecting $600 billion in revenue by 2030.
Considering all factors, while Nvidia’s decline may appear concerning, the muted volume and lack of widespread selling suggest that the dip could be temporary, and the firm’s role in the AI scene will likely drive more growth in the future.
