Nvidia's stock fell 3.52% during Monday's session, closing at $203.53, affected by a sell-off that hit chip stocks, as investors took profits amid escalating geopolitical tensions in the Middle East and heightened caution ahead of the sector's earnings season.
The pressure on the stock came despite the continued strength of the AI sector's fundamentals, and after TSMC, the world's largest chipmaker and Nvidia's top supplier, announced that its revenue grew by 36% year-on-year during the second quarter to reach NT$1.27 trillion, exceeding market expectations, supported by strong demand for AI chips.
In contrast, Nvidia continues to tighten compliance procedures related to AI chip sales in Asia, by reducing the list of approved customers and tightening buyer verification processes, in compliance with US restrictions on exporting advanced chips to China.
Analysts believe that continued strong demand for AI chips, along with TSMC's strong results, supports the long-term positive outlook for Nvidia's stock, but it still faces short-term pressures due to profit-taking, geopolitical risks, and regulatory constraints.
