New York, NY – Nvidia (NVDA) stock saw a nearly 5% drop on Monday morning as investors responded to the implications of restrictions imposed by both the Biden and Trump administrations on the company’s chip sales to China. The White House recently announced new export rules that further limit Nvidia’s ability to sell its advanced AI chips overseas, prompting Chinese competitors to step in to fill the void.
Reports surfaced on Monday indicating that Huawei is gearing up to ship its own advanced AI chip, the 910C, in the near future. This move by Huawei highlights China’s escalating efforts to bypass U.S. technology restrictions, positioning the company to potentially benefit from the crackdown on Nvidia. Analysts at Jefferies (JEF) have suggested that these new export rules could end up benefiting Chinese chip companies by pushing domestic buyers to seek alternatives to U.S. suppliers.
Nvidia CEO Jensen Huang recently visited China in an attempt to reassure partners and regulators that the company is still committed to doing business in the country. The White House’s decision to tighten restrictions on Nvidia’s H20 chip, a product initially designed to comply with previous export rules, signifies a shift in strategy, with the U.S. now willing to harm its own semiconductor industry in order to prevent China from accessing cutting-edge AI technology.
On the other side, Beijing has criticized the U.S.’s approach and President Trump’s efforts to pressure other nations into reducing their trade ties with China. China’s foreign ministry condemned any trade agreements between the U.S. and third-party countries that come at China’s expense, characterizing the actions as aggressive rather than defensive.
Nvidia’s shares have fallen by approximately 17% in the last month, contributing to broader market declines with the Nasdaq down 10% and the S&P 500 down 8% over the same period. As a leading global chipmaker and a key player in AI infrastructure, Nvidia’s market significance has led to ripple effects within the U.S. market, with the company’s stock movements influencing overall market trends.
With a market capitalization nearing $2.5 trillion, analysts estimate that Nvidia commands over 80% of the AI training chip market, solidifying its position as a crucial player in the global tech industry. Given its substantial presence in the Nasdaq 100 and S&P 500, developments in Nvidia’s operations have the potential to impact the broader market, emphasizing the significance of the company amid escalating trade tensions between the U.S. and China.