NVIDIA Stock Forecast as China Allows DeepSeek to Buy H200 Chips

NVIDIA stock price held steady this week as its top customers, like Meta Platforms and Microsoft, announced their results, and China allowed some of its top customers to purchase its H200 chips. NVDA stock was trading at $193c, up a bit from the year-to-date low of $177.

China’s Chip Policy Boosts NVIDIA Stock While Aiding Local Rivals

NVIDIA stock price jumped after Beijing’s decision. Regulators allowed DeepSeek, a major AI rival, to buy H200 chips. The move boosted investor confidence in NVIDIA’s growth.

The announcement came a few days after authorities allowed companies like Alibaba, ByteDance, and Tencent to acquire the chips. Reuters suggested that these companies will be allowed to buy up to 400,000 chips from NVIDIA.

With each chip selling for $27,000, it means that the company will make over $10 billion. It is still unclear how many chips DeepSeek will be allowed to buy, but the number could be in the thousands.

More Chinese companies are also lining up to buy these chips. A report released by Reuters earlier this year estimated that the company could receive over 2 million orders. It’s much higher than the 700k it had in its inventories.

China will likely keep restricting NVIDIA chip purchases. The government aims to boost its domestic semiconductor industry. Firms like Huawei, MetaX, and Moore Threads stand to benefit.

Top NVIDIA Clients Released Mixed Results

NVDA stock price remained on edge as its top customers published their earnings. Microsoft, which is its biggest client, plunged by 12% on Thursday, its worst performance in over 5 years.

The company reported slower cloud computing revenue in the second quarter. At the same time, its capital expenditure surged. Spending hit a record high of $37.5 billion. Most of this expenditure went to NVIDIA, while supplying the chips powering its data centers.

Therefore, there is a sign that the company will start slashing its capital expenditure in the future. This will hurt NVIDIA.

At the same time, the company is building its ASIC chips, which it hopes to deploy in its data centers, replacing NVIDIA. Other companies like Google and Amazon are doing the same.

In another major news, Amazon announced massive layoffs this week as it prepared to publish its financial results. That could be a sign that it expects its closely watched AWS business will publish weak financial results next week.

On the positive side, Meta Platforms’ stock jumped by over 10% after publishing strong financial results. That’s a sign that its AI investments were doing well.

News reports indicated that OpenAI was performing strongly. The company, a major consumer of AI chips, was raising billions of dollars. This underscored its growing influence in the AI industry.

Top American companies like Amazon and Microsoft are planning to invest $60 billion in the company. On the other hand, Softbank has lined up a similar amount. The company is also raising over $50 billion from Middle East investors, a sign that they expect the boom to continue.

NVIDIA Stock Price Technical Analysis

The daily timeframe chart shows that the NVIDIA stock price has remained in a narrow range in the past few months. It was trading at $192 on Friday, a few points above the year-to-date low of $177.

It has climbed just above the 50-day EMA. The price also crossed the Strong, Pivot, and Reverse levels on the Murrey Math Lines tool. These signals suggest a potential shift in momentum.

The main risk, however, is that the stock has formed a large head-and-shoulders pattern. It’s a common bearish reversal sign in technical analysis.

Data show the stock is forming a bearish divergence. The Percentage Price Oscillator has turned lower. The RSI indicator is also pointing downward.

Therefore, the most likely scenario is where the stock retreats in the near term and then rebounds later this year. Such a performance would mirror that of other top AI companies like ServiceNow and Palantir that have plunged.