Nvidia stock pulls back from record high on news of potential cap on US chip exports and dismal ASML earnings

Nvidia (NVDA) stock fell more than 5% on Tuesday, partly reversing a two-week rally down from a record closing high the day before.

The stock’s decline began before the market opened in response Bloomberg report Biden administration officials are considering capping US chip exports to certain countries. Bloomberg, citing unnamed sources, reported that the potential regulations would focus on Arab Gulf states in the interest of national security. Shares of chipmakers Advanced Micro Devices (AMD) and Intel (INTC) also fell on the news.

Intel declined to comment on the report. Nvidia and AMD did not immediately respond to Yahoo Finance’s requests.

Adding to the woes for chip stocks on Tuesday was a dismal earnings report from semiconductor equipment supplier ASML (ASML). The Dutch company — which sells equipment to chipmakers TSMC and Intel — reported orders worth just 2.6 billion euros ($2.8 billion), far below the 5.39 billion euros forecast by Wall Street analysts tracked by Bloomberg.

The PHLX Semiconductor Index (^SOX) fell 4.4% on Tuesday, significantly underperforming the S&P 500 (^GSPC), which was down 0.5% at midday.

Nvidia’s decline on Tuesday partly reverses a two-week winning streak that saw the stock rise to a new record closing price on Monday, nearly surpassing Apple ( AAPL ) as the most valuable company on Wall Street. Shares closed above $138 on Monday, ahead of the previous record of $135.58 in June. Nvidia’s tears were fueled by news of intense demand for its AI chips and renewed optimism about AI.

Nvidia stock has been more volatile since its 10-for-1 stock split in June, and news of rising trade tensions focusing on the AI ​​chip sector — which Nvidia leads — has sent shares lower several times over the past two years. For example, Nvidia shares saw a similar decline This time last year – when the Biden administration tightened export controls on US chips – before it continued its historic rise.

Despite Tuesday’s decline, Nvidia shares are up 186% over the past year. While demand for AI chips is strong in the near term, a potential slowdown in big tech spending on AI is another reason for investor concern, in addition to geopolitical risks. DA Davidson’s Jill Loria recently told Yahoo Finance that AI spending could decline by 2025, which would be bad news for Nvidia stock.

Nvidia is scheduled to report earnings on November 19. Wall Street analysts expect the company to report revenue of $33 billion, up 82% from the previous year, according to Bloomberg estimates. About 90% of Wall Street analysts covering stocks tracked by Bloomberg recommend buying Nvidia stock.

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Laura Bratton is a reporter for Yahoo Finance. Follow her on X @LauraBratton5.

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