Nvidia Stock Falls as U.S. Trade Restrictions Threaten Billions in Orders
Nvidia (NVDA) shares experienced a dip in value on Tuesday following a report stating that the latest trade restrictions placed on China by the United States could lead to the cancellation of billions of dollars in orders for the artificial-intelligence chip leader.
The Wall Street Journal revealed that these U.S. government export controls could have a significant impact on around $5 billion worth of orders from major Chinese companies in 2024. Nvidia had initially aimed to deliver advanced chips to China prior to the new regulations taking effect in mid-November. However, U.S. officials informed Nvidia last week that the export restrictions were to be enforced immediately.
These restrictions on AI chip sales to China are a part of the Biden administration’s efforts to prevent the transfer of artificial intelligence technology to China’s military. The U.S. government is concerned about China’s potential use of AI chips for cyber warfare and other applications.
Announced on October 17, the latest restrictions state that any company selling AI chips surpassing a certain performance benchmark must obtain a license from the U.S. Commerce Department before exporting them to China and other countries of concern.
As a result of this news, Nvidia stock experienced a 0.9% decrease, with shares closing at $407.80 on the stock market today. It is worth noting that Nvidia shares had achieved an all-time high of $502.66 on August 24 following the release of its fiscal second-quarter earnings report.
Nvidia stock is included on three IBD stock lists: IBD 50, Leaderboard, and Tech Leaders. It is also one of the prestigious “Magnificent Seven” stocks, along with Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), and Tesla (TSLA).
Nvidia, headquartered in Santa Clara, California, is scheduled to report its fiscal third-quarter results on November 21.
For more stories on consumer technology, software, and semiconductor stocks, follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz.
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