Nvidia stock fell Tuesday after a news report said the latest U.S. trade restrictions on China could force the artificial-intelligence chip leader to cancel billions of dollars in orders.
The Wall Street Journal said the U.S. government's export controls could impact $5 billion in orders from major Chinese companies in 2024. Nvidia had hoped to deliver some advanced chips to China ahead of the new rules taking affect in mid-November. But U.S. officials told Nvidia last week that the new export restrictions were effective immediately.
The restrictions on AI chip sales to China are part of the Biden administration's efforts to keep artificial intelligence technology away from China's military. The U.S. is worried about China using AI chips for cyberwarfare and other applications.
The latest restrictions, announced Oct. 17, require any company whose AI chips exceed a performance benchmark to seek a license from the U.S. Commerce Department before exporting them to China and other countries of concern.
Nvidia Stock Drops On News
On the stock market today, Nvidia stock fell 0.9% to close at 407.80. Nvidia shares notched an all-time high of 502.66 on Aug. 24 after its fiscal second-quarter earnings report.
Nvidia stock is on three IBD stock lists: IBD 50, Leaderboard and Tech Leaders.
Also, Nvidia is one of the so-called "Magnificent Seven" stocks. The others are Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft and Tesla.
Santa Clara, Calif.-based Nvidia plans to report its fiscal third-quarter results on Nov. 21.
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