Nvidia Stock Plummets 6% on Concerns Over New Chip Sale Restrictions to China
Nvidia (NVDA) shares plummeted 6% on Wednesday following reports that the Trump administration is considering additional curbs on Nvidia's chip sales to China.
Bloomberg's report indicates that the talks are in the early stages and may target Nvidia's H20 chips, a scaled-down product designed to comply with existing U.S. restrictions on shipments to China.
The news comes amidst a turbulent week for Nvidia shares, which experienced their worst-ever one-day market cap loss on Monday. The stock plunged nearly 17% as investors grappled with the growing popularity of a cost-effective AI model from Chinese startup DeepSeek.
DeepSeek's AI model reportedly employs cheaper chips and requires less data, sparking concerns that it could erode future AI chip sales and challenge the dominance of U.S. hyperscalers in the market. Investors also fretted that the developments could disrupt the positive earnings revision trend seen in Nvidia and other Big Tech companies throughout the bull market.
Nvidia shares partially recovered on Tuesday, rising 9%, as Wall Street analysts largely dismissed the sell-off as excessive. However, Wednesday's decline following the Bloomberg report suggests that the stock may not be out of the danger zone yet.
Investors will be closely monitoring updates from Nvidia's major customers, Tesla (TSLA), Microsoft (MSFT), and Meta (META), after market close on Wednesday for insights into the current demand for AI chips.