Nvidia’s stock closed the week on a downward trajectory, shedding value as broader sector anxieties overshadowed a significant new development in its Chinese business. The sell-off was triggered not by company-specific news but by disappointing earnings from Oracle, which reignited market fears about the return on investment from the artificial intelligence boom.
Sector-Wide Jitters Over AI Capital Expenditure
The core concern driving the recent volatility is renewed skepticism regarding the pace at which massive investments in AI infrastructure will translate into tangible profits. Oracle’s quarterly report, which fell short of revenue expectations, acted as a catalyst. This single data point was enough to unsettle investors, prompting questions about whether the current surge in capital expenditure (Capex) across the tech industry is justified by end-customer profitability.
This wave of doubt impacted the entire sector. Market observers are increasingly scrutinizing the sustainability of the investment boom, questioning if it is backed by corresponding gains downstream. Reflecting this cautious sentiment, Nvidia shares declined by 3.24 percent to close at 149.14 euros. The stock now trades approximately 17 percent below its 52-week high.
A Powerful New Catalyst from China
Parallel to these U.S.-centric worries, a substantial demand driver is materializing in Asia. Following conditional U.S. government approval—which includes a 25 percent tariff—for exports of its high-performance H200 chip to China, demand in the region is already reported to be outstripping supply. Major Chinese tech firms, including Alibaba and ByteDance, have shown strong interest in the processor, which offers six times the performance of the H20 model previously tailored for the Chinese market.
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In response to this surge, Nvidia is reportedly evaluating an expansion of its production capacity. A company spokesperson emphasized that meeting this Chinese demand would not compromise the supply of chips to the U.S. market.
A key regulatory uncertainty remains, however. The Chinese government has not yet granted final import approval. Discussions in Beijing are ongoing, with a potential condition being that purchases of Nvidia chips be tied to procuring a certain proportion of domestically produced semiconductors.
Long-Term Analyst Confidence Endures
Despite the short-term sector rotation and price volatility, leading analysts maintain their bullish outlook on Nvidia. Experts consistently point to the company’s unrivalled leadership in AI computing and networking. Bank of America, in particular, reaffirmed its buy rating, citing clear demand visibility extending well into 2026, which underscores the long-term growth narrative.
Looking ahead, two critical factors will likely dictate the stock’s trajectory. First, upcoming quarterly earnings from the broader technology sector must demonstrate that the AI boom is generating profits at the end-customer level. Second, investors await a definitive signal from Beijing regarding whether imports of the H200 chip can proceed without overly restrictive conditions.
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