NVIDIA’s 0.97% Drop Amid AI Chip Dispute as Trading Volume Tops $27.8B

On August 5, 2025, Nvidia (NVDA) closed with a 0.97% decline, despite leading the stock market in trading volume at $27.87 billion. The drop came amid geopolitical tensions over its AI chip technology.

Nvidia categorically denied allegations from the Chinese Cyberspace Administration that its H20 data center GPUs for the Chinese market contain "kill switches" or backdoors allowing remote deactivation. Chief Security Officer David Reber stated in a blog post that the company's GPUs "do not and should not have kill switches and backdoors," emphasizing such features would violate cybersecurity principles and create vulnerabilities exploitable by hackers. The dispute follows Beijing's request for documentation on alleged security risks in the H20 chip, which generates significant revenue for Nvidia despite U.S. export restrictions.

The controversy highlights Nvidia's position at the center of U.S.-China tech tensions. While the U.S. has imposed export controls on advanced chips to China over national security concerns, Beijing now demands transparency guarantees. Nvidia's CEO Jensen Huang has argued that U.S. interests are served by making American chips the global standard for AI, but the company faces mounting pressure to navigate conflicting demands from both governments. The H20 chip, temporarily banned from export in April, remains a focal point as China questions its safety while the U.S. seeks to regulate its use.

The strategy of purchasing the top 500 stocks by daily trading volume and holding them for one day delivered a 166.71% return from 2022 to the present, outperforming the benchmark return of 29.18% by 137.53%. This underscores the role of liquidity concentration in short-term stock performance, particularly in volatile markets.