To The Moon

On 27 Oct 2023, I have posted about Nvidia and other semiconductor stocks that will be affected by the Biden administration’s bringing forward the ban of advanced chips to China. (see below).

• Nvidia & others cont'd to fall or rise? - click title to read. Help to re-post ok. Tks.

For reasons unknown, the post was not well received.

It garnered only 886 likes.

However, I feel “compelled” to provide an update because so much have happened to $NVIDIA Corp(NVDA)$ a mere 4 days later. (see below)

• It is likely that Nvidia, may have to cancel up to $5 Billion worth of orders for its advanced chips to China due to new U.S. export controls.

• The new rules, which has been inforced since last week, restrict the sale of high-end chips to countries including China that could use them for military or cyber purposes.

• According to sources, Nvidia had already delivered its 2023 orders to China.

• In fact it was attempting to ship in-advanced the Chinese 2024 orders before the original deadline of mid-Nov 2023 kicks in.

• Upon being notified that the new restrictions were effective immediately, it has put future orders in limbo.

• Nvidia's Chinese customers include tech giants eg. $Alibaba(BABA)$, $Baidu(BIDU)$, $Tencent Holding Ltd.(TCEHY)$, etc…, that rely on its chips for their AI applications.

Although Nvidia’s comms department issued a statement very quickly, managing damage control by refuting any impact to its Q4 2023 earnings, the wolves of Wall Street know better. (see below)

• Referring to my 27 Oct 2023 post, Nvidia stock price then was $436.63 per share.

• Looking at Nvidia’s 31 Oct 2023 stock price, it stood at $407.80 per share.

• In 3 days, Nvidia has lost -6.60% ($28.83 per share), following a report that Nvidia may be forced to cancel up to $5 Billion worth of advanced chip orders to China, in compliance with new US government restrictions.

How I See The Whole Thing:

• Nvidia’s Tue, 31 Oct 2023 fall has brought it to a near 5-month low.

• It is not rocket science that Nvidia is poised to lose up to $5 Billion in revenue come 2024.

• It will be a significant hit as China accounts for approximately 20% of Nvidia’s total revenue (2023).

• Thes lost will definitely have a significant impact on the chip giant’s balance sheet.

• Looking at Nvidia’s stock movement (see above), it is treading below its 20-day & 50-day moving average (ma).

• For the 20-day ma, in the short term, Nvidia will continue to dip.

• For the 50-day ma, it implies that buying demand is drying up and the stock's run is ending.

• Is the new restriction finally working its magic? (see below)

• China needs the advanced AI-chip to help propel its tech industry into the AI-phase.

• Failure to secure them would guarantee [a] falling behind and [b] a demise to its IT industry.

• US on the other hand still wants China to stand on its side (the Western alliance) side and help push the agenda for a closure to the Russia/Ukraine invasion that has lasted 614 days and counting.

• If the world is able to close the chapter on the Russia/Ukraine war, the “euphoria” it will bring to the US stock market will be unimaginable.

In my humble opinion,

• Wall Street will continue to sell down Nvidia as its forward earnings will be impacted by its loss of the China market.

• Looking at the chart again, Nvidia’s future price is forecasted to fall another -0.66% at the start of trading.

• Investors need to remain cautious & bearish until there is more clarity & certainty on Nvidia’s ability to [a] cope with the US-China tensions and [b] find alternate sources of demand for its chips.

• Do you think Nvidia will continue to fall today and this week?

• Do you think other Semiconductor stocks’ fall will be more or less severe than Nvidia’s?

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