Tech stocks suffered significant losses on Thursday, extending a sell-off that began yesterday. The sector’s decline was led by Nvidia, whose shares dropped 3% in recent trading and fell another 4% to close at around 7% for the week.
The drop is due to Nvidia’s announcement that it will take a $5.5 billion charge related to new export curbs on its H20 chips sold to China. Advanced Micro Devices (AMD) also warned of potential losses from similar restrictions, causing its shares to slip 1%.
Bank of America analysts say the rising AI restrictions could have far-reaching impacts on other key stocks in the field, including Broadcom, Micron Technology, and server maker Super Micro Computer.
The analysts note that Nvidia’s write-down indicates a “low probability of future licenses” to circumvent new restrictions. They also warn that AI diffusion rules set to take effect in May could further limit sales of American AI hardware to other countries.
Wedbush analysts are cautiously optimistic, saying the news is concerning but not unexpected given the ongoing US-China trade war.
Source: https://www.investopedia.com/why-new-china-chip-export-curbs-could-affect-far-more-than-just-nvidia-amd-11717188