Nvidia Stock Drops 6% on Potential Further China Chip Sales Curbs
Nvidia (NVDA) shares plunged 6% on Wednesday following Bloomberg's report that the Trump administration is considering "additional curbs" on the company's chip sales to China. The Bloomberg report noted that the discussions are still in "very early stages."
The potential restrictions would reportedly target Nvidia's H20 chips, a modified version designed to comply with existing U.S. export controls to China.
This news comes after a tumultuous week for Nvidia, which experienced its largest single-day market cap loss on Monday. The stock tumbled nearly 17% as investors reacted to the emergence of a cost-effective artificial intelligence model from Chinese startup DeepSeek.
DeepSeek's AI model purportedly uses lower-cost chips and less data, raising concerns that it could impact Nvidia's future AI chip sales and challenge the dominance of U.S. hyperscalers. The development also sparked worries that it could disrupt the upward revision trend in earnings estimates for Nvidia and other Big Tech companies.
Nvidia shares rebounded 9% on Tuesday, with many Wall Street analysts arguing that the sell-off was excessive. However, Wednesday's sharp decline following the Bloomberg report suggests that the stock's recovery may not be sustainable.
Investors will eagerly await updates from Nvidia's major customers, such as Tesla (TSLA), Microsoft (MSFT), and Meta (META), for insights into the current demand for AI chips.