Here's a story about how trade policy can create new competitors almost overnight. Alibaba Group Holding Limited (BABA) and other Chinese tech firms are hitting the accelerator on a shift toward domestic AI chips. The catalyst? Ongoing U.S. restrictions on Nvidia Corp (NVDA) are redrawing the competitive map and, in the process, giving Huawei's (HWBEY) semiconductor ambitions a serious boost.

From Hesitation to Orders: Alibaba and ByteDance Get On Board

Think of it as a product launch that's finally finding its audience. According to a Reuters report citing sources, Alibaba and ByteDance are now preparing to place orders for Huawei's latest AI chips. This comes after customer testing delivered strong results. It marks a notable pivot from earlier, more cautious attitudes around Huawei's previous offering, the Ascend 910C. The improved reception isn't just a technical win; it's a psychological one. It signals that China's largest tech players are growing more comfortable with—and committed to—homegrown alternatives when the global supply chain gets political.

Why the New Chip Is a Game Changer

So, what's different this time? Huawei is reportedly gaining traction with its new 950PR chip thanks to two key upgrades: better compatibility with Nvidia's ubiquitous CUDA software ecosystem and faster raw performance. For developers who've built mountains of code for Nvidia's architecture, that compatibility is a big deal—it lowers the switching cost. The company began sending out samples in January and plans to start mass production soon. The target is ambitious: around 750,000 units in 2026, with broader shipments expected to ramp up in the second half of this year. They're not just making a chip; they're building a pipeline.

The Big Picture: A Market Forced to Choose Sides

The backdrop here is a classic case of market forces meeting geopolitical ones. U.S. restrictions on advanced Nvidia chips have effectively carved out a massive opportunity for Huawei and other local players. Simultaneously, China is in a full-court press to build its own semiconductor capacity from the ground up. Companies like Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor Limited are in a race to expand advanced chip production, aiming to significantly boost output despite facing constraints on accessing the latest manufacturing equipment from abroad.

But here's the fascinating counter-narrative. Even as Huawei advances, the sheer scale of Chinese demand means Nvidia's story there isn't over. JPMorgan analyst Harlan Sur pointed out that Nvidia still holds significant upside if export approvals improve. His math is compelling: every 100,000 H200 GPUs shipped to China could generate about $3 billion in revenue. He noted that case-by-case approvals could reopen the market, with strong Chinese demand ready to convert into sales almost immediately if restrictions ease. In other words, there's a multi-billion-dollar wildcard sitting on the table.

Checking Nvidia's Pulse: Technicals and Fundamentals

Let's look at how Nvidia itself is trading amid all this strategic maneuvering. Technically, the stock is sending mixed signals. It's trading 4.2% below its 20-day simple moving average and 6.7% below its 100-day average, which keeps the intermediate trend under pressure even as the stock tries to find a footing. Yes, shares are up an impressive 53.67% over the past 12 months, but they're currently closer to the 52-week low ($86.62) than the high ($212.19).

The Relative Strength Index (RSI) sits at 39.02, which is in neutral territory but leaning toward the "washed-out" side rather than overbought. Meanwhile, the Moving Average Convergence Divergence (MACD) is at -2.7707 and remains below its signal line at -1.9507, which reinforces bearish near-term momentum. The combo of an RSI below 50 and a bearish MACD suggests downside pressure is still outweighing any bounce. For traders, key levels to watch are resistance around $194.00 and support near $170.50.

What Analysts Are Saying About the Future

Looking beyond the daily charts, the next major scheduled catalyst is the estimated earnings report on May 27, 2026. The expectations are, as always for Nvidia, huge:

• EPS Estimate: $1.74 (Up from 96 cents year-over-year)
• Revenue Estimate: $78.71 Billion (Up from $44.06 Billion year-over-year)
• Valuation: A P/E of 34.9x, indicating a premium valuation relative to peers

The analyst consensus remains firmly in the bull camp. The stock carries a Buy rating with an average price target of $281.04. Recent analyst actions reflect this confidence:

• Rosenblatt: Buy (Maintains Target at $325.00) (Mar. 23)
• Cantor Fitzgerald: Overweight (Maintains Target at $300.00) (Mar. 23)
• Raymond James: Strong Buy (Raises Target to $323.00) (Mar. 19)

Nvidia's ETF Footprint

Because of its massive market cap, Nvidia is a heavyweight in many exchange-traded funds (ETFs). This creates a mechanical relationship where big flows into or out of these funds can trigger automatic buying or selling of the stock itself. Some of the ETFs with the highest exposure include:

• Amplify CWP Growth & Income ETF (QDVO): 9.73% Weight
• REX AI Equity Premium Income ETF (AIPI): 9.97% Weight
• Xtrackers Net Zero Pathway Paris Aligned U.S. Equity ETF (USNZ): 9.58% Weight

Friday's Trading Action

As of premarket trading on Friday, Nvidia shares were up 0.55% at $172.18.