Nvidia’s (NVDA) stock price dropped 3% on Friday after Reuters reported that the Biden administration attempted to close a loophole that allows Chinese companies to gain access to state-of-the-art computer chips used for artificial intelligence (AI). In particular, Nvidia’s H100 Tensor Core GPU could be hurt by the new regulations.

Nvidia stock moved in opposition to the Dow Jones, which gained ground due to JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) earnings results that proved much better than Wall Street consensus. The NASDAQ Composite and the S&P 500 ignored the banks' success and moved lower.

Nvidia stock news: Chinese corporation’s overseas units may also face AI chip ban

Last autumn, the Biden administration decided to get tough on China by banning exports of Nvidia’s H100 and A100 GPUs to the mainland, both of which are used in generative AI as well as military applications. In addition, Advanced Micro Devices’ (AMD) MI250 accelerator chip was also affected by the ban. At the time, Nvidia said the new regulations would cost it as much as $400 million in sales.

However, according to Reuters, the administration is now aware of mainland companies accessing the AI chips via a loophole that permits overseas units of Chinese companies to still procure the products. The foreign subsidiaries then either ship the chips illegally to the mainland or allow their companies to access the chip technology remotely though the infrastructure operates far outside China.

As per Reuters: “The very chips barred by US regulations could be purchased from vendors in the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen.”

It is unclear exactly how Washington can completely wall off China from this AI technology however. Chinese corporations are already accessing the technology through third parties like Amazon Web Services, who utilize these chips in their industry-leading data centres.

Nvidia stock chart: MACD crossover shows uptrend still in motion

At the time of writing, Nvidia stock is down 0.8% to $465 per share. Investors need not worry though. Nvidia is continuing its uptrend that began after the stock bottomed out just below $410 on September 21. That means NVDA has been gradually advancing for three and a half weeks now, and there really is not sign that the party is about to end.

The Moving Average Convergence Divergence (MACD) indicator has been in a bullish crossover for a while now. The $470 range that acted as resistance on NVDA’s way down in late July could emerge as resistance once again. But the main trend here is a widening upward trend channel.

NVDA stock has already reached that top trendline four times over the course of this year. A fifth time would bring the premier semiconductor stock up to the vicinity of $550. With the MACD breaking above the zero threshold, that 18% leap does not seem improbable.

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