Nvidia CEO Sounds Alarm: Chip Export Restrictions Threaten Stock Performance

Nvidia’s CEO delivers stark warning as proposed legislation threatens to cripple key semiconductor exports—potentially sending NVDA shares into a tailspin.

The tech giant faces regulatory headwinds that could disrupt its AI chip dominance, leaving investors scrambling to reassess their positions.

Market watchers brace for impact: will this be a temporary setback or the start of a structural shift in the semiconductor landscape? (Meanwhile, hedge funds quietly short the stock while publicly expressing ’concern.’)

Jensen Huang Defends China Access as New Tracking Bill Targets AI Chip Smuggling

A bipartisan bill targeting Nvidia chip export restrictions and chip smuggling has been introduced recently by U.S. Representative Bill Foster. The legislation would verify AI chip locations after sale and also prevent unauthorized activation. This move comes after numerous reports of these chips being smuggled into China despite the existing restrictions that have been in place for some time.

Huang had this to say on the topic:

Financial Impact on NVIDIA’s Future

The financial consequences of these NVIDIA chip export restrictions have been substantial. NVIDIA shares have declined approximately 15% this year after nearly tripling in 2023. China generated around $17 billion in revenue for NVIDIA last fiscal year, which accounted for about 13% of total sales.

The newly proposed legislation allocates six months for Department of Commerce to create tracking rules. As Chinese technology companies accelerate efforts to create homegrown replacements for NVIDIA products the US government uses this opportunity to introduce restrictive regulations.

Huang is also conviced by this:

H20 export controls and new tracking measures create substantial hurdles which threaten to impede NVIDIA’s growth strategy. The expected yearly revenue growth stands at 65% between previous years but will reach $43.1 billion while NVIDIA deals with decreased performance because of chip export restrictions throughout global markets.