Why AI Stalwart Nvidia’s Stock Is Rising Premarket

• Nvidia currently sells minimal China-specific H20 chips to the country ever since the Trump administration thawed its stance after initially banning their exports in April.
• The stock is down about 12% in November, dragged lower by AI bubble fears
• According to Koyfin, the average analysts’ price target for Nvidia stock is $247.50, implying nearly 40% upside.

Nvidia Corp. (NVDA) shares are rising modestly in Monday’s premarket session, signaling a potential reversal from the declines in the past two sessions. 

After rising over 47% through October, Nvidia’s stock has fallen nearly 12% in November. 

The Nvidia Catalysts

The premarket rise in Nvidia stock is mainly due to the reversal in the broader market sentiment. The major index futures are trading firmly in the green early Monday, with Nasdaq 100 futures up nearly 0.80%. Most companies, especially the tech stocks, have pulled back notably, providing an attractive entry point in some high-quality names.

Nvidia may also be getting a boost from a Reuters report citing sources that said the Commerce Department is mulling a change to its policy banning the export of high-performance chips to China. Specifically, the U.S. was considering allowing the sale of Nvidia’s H200 artificial intelligence (AI) chip, based on the previous generation Hopper architecture, to the Asian nation. Nvidia has since been selling its next-gen Blackwell architecture and is readying to launch its Vera Rubin chips next year. 

Nvidia currently sells minimal China-specific H20 chips to the country ever since the Trump administration thawed its stance after initially banning their exports in April.

Why It’s Important

Nvidia said it sold merely $50 million worth of AI chips to China in the third quarter, a marked reduction from the $4.03 billion revenue China, including Hong Kong, contributed to the top line in the third quarter of 2023 before the Biden ban came into effect.

China, for its part, has taken an antagonistic stance toward the whole chip curb saga, stepping up incentives and funding for homegrown chipmakers and explicitly instructing state enterprises and government agencies to ban the use of Nvidia chips, citing security concerns.

What Retail Feels About Nvidia Stock

On Stocktwits, retail sentiment toward Nvidia stock stayed ‘extremely bullish’ as of early Monday, and the message volume on the stream also remained ‘extremely high.’ 

A bullish user said Nvidia stock may be bracing for a face-tearing rally into the new year after November turned out to be the new September.

Another user questioned the logic of those raising concerns about an AI bubble. “With AI, more computational power = more intelligence = more productivity = more revenues. How is this a bubble?” they asked.

According to Koyfin, the average analysts’ price target for Nvidia stock is $247.50, implying nearly 40% upside.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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