The Export Shock of Nvidia
The recent tightening of chip export rules by the US government has put Nvidia in a difficult position. These measures could result in billions of losses for the company and have far-reaching effects on the entire tech sector.
Background
The US government has introduced new export restrictions on high-performance AI chips like Nvidia’s H20 model to China. These chips were specifically developed for the Chinese market, as earlier high-performance models were already under export bans. The new rules require special licenses for the sale of these chips in China and other countries, which significantly impacts Nvidia’s business.
Financial Impact
Nvidia expects a potential loss of up to $5.5 billion in the first quarter of 2025. This amount mainly results from inventory and purchasing commitments for the H20 chip, which may no longer be marketable. In the last fiscal year, China contributed about 13% to Nvidia’s total revenue, indicating that the Chinese market is of great importance.
Market Impact
The news about the tightened export rules quickly affected the markets:
- Nvidia Stock: The price fell by up to 7% in a single day.
- Tech Sector: Other leading semiconductor manufacturers like AMD saw their stocks drop by about 6%. Micron Technology and Broadcom were also affected.
- Global Markets: Nasdaq futures lost about 2.2%, while the S&P 500 fell by approximately 1.4%. In Asia, key indices also fell significantly.
Analysts’ Reactions
Analysts are divided about Nvidia’s future prospects:
- Some maintain a positive outlook.
- Others have lowered their price targets; Bank of America is among them.
Despite these challenges, the average analyst rating for Nvidia shares remains at “Strong Buy” with a projected price increase of about 62.89% within the next twelve months.
Geopolitical Tensions
The tightened export rules reflect the ongoing geopolitical tensions between the US and China. The measures aim to restrict China’s access to advanced AI technology – a central point in the trade conflict between the two nations.
Overall, a complex picture emerges: While Nvidia faces short-term challenges, the company could continue to play a central role in the tech sector in the long term – particularly through partnerships like with General Motors to integrate AI into their business areas.