Nvidia Stock Rises. What’s Driving the Chip Maker’s Rebound.

Nvidia has become caught up in a trade conflict between the U.S. and China, the world’s two largest economies. (Dreamstime)

Key Points

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• Nvidia shares were rising after a previous drop due to China’s AI chip ban.
• Nvidia’s stock was boosted by a $5 billion investment in Intel, which saw its shares soar nearly 30% following the announcement.
• Trade talks between the U.S. and China are in focus, with Nvidia’s CEO noting concerns over larger agendas between the countries.

Nvidia stock bounced back Thursday, after the stock sold off in the previous session on a report that China had banned its artificial-intelligence chips.

Shares rose 2.8% to $175.25 in morning trading, following a 2.6% drop Wednesday. An announcement that it would invest $5 billion in peer chip maker Intel boosted shares, too. Intel stock soared nearly 30% on the news.

The S&P 500 and the tech-heavy Nasdaq Composite indexes were up 0.4% and 0.8%, respectively, amid hopes for lower borrowing costs as the Federal Reserve decided to cut interest rates by a quarter point on Wednesday.

China is likely to be in focus again Thursday as trade talks, between the U.S. and China are progressing. The relationship between the world’s two largest economies was complicated further Wednesday.

CEO Jensen Huang said he was disappointed to hear that China’s internet regulator told the country’s largest tech companies to stop buying Nvidia’s AI chips and terminate its existing orders, and there were “larger agendas to work out between China and the United States.”

“This is expected to be leverage that President Xi can utilize to negotiate a better trade deal with the U.S.,” said market strategist Louis Navellier. “It will be interesting to see exactly what President Trump announces on Friday after his call with President Xi, other than the anticipated TikTok deal.”

Nvidia shares have struggled for direction since its latest earnings report in mid-August, as investors await clarity on the company’s future in China.

Coming into Thursday trading, the stock has fallen 4.3% this week. It was up 27% so far this year, outperforming the Nasdaq Composite, which rose 15% over the same period.

Write to Elsa Ohlen at elsa.ohlen@barrons.com