The NASDAQ index has dropped by 300 points, equating to a decrease of 1.66%, landing at 17969.44, with a low of 17959.93. Notably, shares of Nvidia and Tesla are contributing to the downturn, with Tesla down 4.78% and Nvidia down 5.52%.
Nvidia’s decline stems from uncertainties regarding its AI chip business in China. The Chairman of Alibaba questioned the value of extensive AI infrastructure spending at a recent investment summit, alongside the U.S. adding several Chinese firms to a trade blacklist, limiting their access to American technology.
Nvidia And Regulatory Challenges
Additionally, China is reportedly discouraging domestic corporations from purchasing Nvidia’s H20 chip due to energy-efficiency issues. Although regulatory changes are not yet in effect, Nvidia is planning discussions with Chinese authorities and might need to revise its chip design, impacting its competitive stance.
Tesla faces challenges related to Musk’s past administration ties, affecting sales in Europe and the US. Increased trade tensions may also detrimentally influence Tesla’s sales in China.
On a technical note, the NASDAQ index moved above the 100-hour moving average on Monday but has now dipped below the Monday low of 18030.68. For any recovery, levels to watch include 17917.54 from March highs, with moving averages at 17844.81 and 17755.62 as potential downside targets.
Market Sentiment And Key Levels
This downturn in the NASDAQ reflects direct pressures on two notable stocks, with broader sentiment shifting in response to specific developments in both the technology and automotive sectors. Given the scale of these moves, prudent attention must be paid to external factors shaping the expectations around these companies.
For Nvidia, the concerns surrounding its AI chip business stem from a mix of geopolitical constraints and market scepticism. The questioning of expansive AI investments by Alibaba’s chairman introduces an element of doubt regarding long-term infrastructure spending. This comes alongside fresh trade restrictions from Washington, further complicating the ability of Chinese firms to access Nvidia’s products. Additionally, reports indicate that directives within China discourage domestic firms from purchasing the H20 chip due to efficiency concerns. While no formal policy has been implemented, direct engagement between the firm and regulatory authorities suggests that adjustments to product designs may eventually be necessary. If such revisions become required, competition in AI chip production shifts, as adaptability dictates future success in the sector.
Tesla’s struggles have a political dimension that extends beyond China. Elon Musk’s ties with prior US leadership have reportedly had an effect on consumer sentiment, impacting sales not just in Europe but also in domestic markets. When adding renewed trade pressures between the US and China into the equation, the company could face further headwinds. Demand levels in China remain an area to watch, as any retaliatory measures from Beijing could directly affect its standing within the region.
From a technical perspective, the wider index attempted to sustain support above the 100-hour moving average but has now slipped below Monday’s low. This marks a short-term change in momentum and places specific levels under closer scrutiny. Near-term downside targets emerge at 17917.54, aligning with highs observed in March. Should further selling take place, additional support could arise at 17844.81 and 17755.62, corresponding with moving averages that have supported price action in previous weeks.
Under these conditions, adjustments to positioning should consider these precise levels, alongside ongoing news developments that may alter the trajectory of the market.
