What's Going On With Nvidia Stock Tuesday?

At the CES trade show on Monday, Nvidia Corp NVDA, a leader in AI chip technology for data centers, announced new products to enhance personal computers with AI capabilities. The stock closed higher by over 6%.

The company unveiled three new desktop graphics chips, including the GeForce RTX 4080 Super, which offers increased processing cores and faster memory. 

These chips, set to be sold at competitive prices, enable users to leverage AI directly on their PCs rather than relying on internet-based services, SCMP reports.

These new graphics cards focused on enhancing gaming experiences. Nvidia confirms that 14 popular titles, including Horizon Forbidden West, Pax Dei, and Diablo IV, will receive the RTX upgrade, TechCrunch reports.

The GeForce RTX 4080 Super, capable of running Stable Diffusion XL image generation software 1.7 times faster than its predecessor, supports ray tracing at 4K resolution and will be available from January 31 for $999. The RTX 4070 Ti Super and 4070 Super, priced at $799 and $599, are also part of the lineup. 

Despite a downturn in PC shipments, Nvidia has maintained strong market performance, mainly due to its dominance in AI accelerator chips, reaching a valuation of over $1 trillion. 

The new chips will likely encourage PC upgrades by offering enhanced AI features, such as realistic gaming and responsive image-editing tools. 

Nvidia also confirmed that these new products comply with U.S. export regulations and will not be affected by AI-related chip export limits to China.

Meanwhile, the chip designer battled challenges due to U.S. sanctions on China. Nvidia has designed a new lineup of lower-powered AI chips to comply with these regulations. However, this move has led to decreased interest from major Chinese cloud companies, such as Alibaba Group Holding Limited BABA and Tencent Holding Ltd (OTC TCEHY), which are now turning to local alternatives and reducing their orders for Nvidia's chips. 

Chinese cloud companies, currently sourcing about 80% of high-end AI chips from Nvidia, may curtail this to 50%-60% within five years.

Nvidia has stated that the U.S. sanctions have not significantly impacted them, while other U.S. chipmakers are urging the government to ease its stance on China. 

Meanwhile, analysts are split on how these restrictions might affect Nvidia, given the considerable potential of the long-term Total Addressable Market, independent of China's involvement.

The chip designer gained 235% last year versus the broader index Invesco QQQ Trust, Series 1 QQQ at 50%.

Price Action: NVDA shares traded higher by 0.17% at $523.44 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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