NVIDIA (NASDAQ: NVDA) stock is under heat on August 22, 2025. The company has instructed its suppliers, such as Samsung Electronics and Amkor Technology, to cease development on its China-targeted H20 AI chip. This news has concerned investors over a possible sharp decline in NVIDIA share price.
The stoppage comes after Beijing instructed its domestic companies to steer clear of the H20 due to security reasons. The chip was specifically built as a weaker variation of NVIDIA's top-of-the-line AI accelerators. However, Chinese customers are increasingly turning away from the company and opting for local options from Huawei and Cambricon.
NVIDIA stock declined 1.15% in pre-market trading on August 22, falling to $172.96 after Thursday's close at $174.98. The stock has traded recently just below the top of its 52-week range of $86.62-$184.48. However, investor optimism is being challenged by doubt over its China business. Semi-finished chips reportedly stack up at the company’s packaging partner, Amkor. Analysts caution that supply-chain disruptions may pressure near-term earnings expectations.
Bloomberg Intelligence experts pointed out that although US hyperscaler demand and adoption of NVIDIA's Blackwell platform continue to be strong. The lag in China may cool upbeat growth projections. The firm last wrote off $5.5 billion in excess H20 inventory as a result of US trade sanctions. However, the partial lifting of those restrictions provided some respite. Beijing's recent campaign for indigenous chips stokes new concerns about whether NVIDIA can recover ground in the region.
NVIDIA's earnings are due next week, and Wall Street will be paying close attention to management's commentary regarding China sales and inventories. Investors are preparing for increased volatility for the time being. As one analyst has said, although NVIDIA's US and European business might soften the blow, the uncertainty in China might continue to be an overhang on NVDA stock during the second half of 2025.
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