Nvidia stock falls on trade concerns in China

Nvidia (NVDA) stock fell as much as 2.8% in pre-market trading Monday as investors continued to digest news that Chinese regulators are discouraging domestic companies from buying AI chips from Nvidia.

The stock trimmed losses after the bell, down about 1.4% to about $120.

Bloomberg I mentioned On Friday afternoon, Beijing is urging Chinese companies to buy from chipmakers within its borders — rather than Nvidia’s popular graphics processing units — amid escalating trade tensions with the United States. Nvidia shares ended the day down 2.2% to $121 and fell further early Monday. Meanwhile, shares of Chinese AI chip maker Cambricon Technologies (688256.SS) rose 20% in Monday trading.

Nvidia did not immediately respond to Yahoo Finance’s questions.

Meanwhile, the PHLX Semiconductor Index (^SOX) fell 1.2% early Monday. Shares of rival Nvidia company Advanced Micro Devices (AMD) fell modestly, falling 0.6% to about $163. Qualcomm (QCOM) shares were flat, while Intel (INTC) shares were down nearly 2% to around $23. Memory chip maker and Nvidia partner Micron (MU) fell 3.4% to about $104.

United States issued Stricter export controls On AI chips to China in late 2022 – and continuing to do so Tighten These rules are in an attempt to hinder China’s ability to move forward in the so-called AI arms race. Nvidia has felt the impact: it has achieved sales in China Up to 14% of data center revenue During the company’s fiscal year ending on January 28, 2024, compared to 19% in the previous year.

NVIDIA has responded by trying to overcome these barriers by creating specific versions of its chips for China, which comply with stricter controls.

Hopper’s “H20” chips were launched for China this year – and still are It is expected to generate $12 billion in the company’s revenues this year. Nvidia is also scheduled to launch a version of its latest Blackwell chipset, It’s called B20. For China. A No release date has been set. in the meantime, Black market for Nvidia chips I took off.

Nvidia’s sales in China have rebounded in recent quarters. Total sales revenue in China was about $3.7 billion per year last quarter ending July 28, up 33.8% from a year earlier, according to Bloomberg estimates. Nvidia shares are up 144% since the beginning of the year.

“If the U.S. imposes more aggressive restrictions on sales to China, and China imposes restrictions on its own companies more stringently, that will have a very detrimental impact on Nvidia,” Gil Loria, senior analyst at DA Davidson, told Yahoo Finance on Monday.

Analysts remain bullish on Nvidia despite trade tensions and historical volatility in the semiconductor sector. About 90% of Wall Street analysts recommend buying the stock and see shares rising to $147.61 over the next year, according to Bloomberg estimates.

The story continues

“Unless the economy collapses, or we go to war with someone, Nvidia is strong for at least 12 months,” said Patrick Moorhead, CEO of Moor Insights & Strategy.

Daniel Newman, CEO of Futurum Group, told Yahoo Finance that there is “strong optimism now from senior leaders” in the semiconductor sector. He noted that Nvidia shares have been more volatile since its 10-for-1 stock split in June.

This story has been updated.

Laura Bratton is a reporter for Yahoo Finance.

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