Nvidia share price crashes today: Why have AI giant stocks fallen on Wednesday?

Nvidia share price on Wednesday tanked, taking Nasdaq decisively lower after the AI giant disclosed a large financial hit from American export restrictions to China. Shares of Nvidia slumped nearly six per cent as the chip company disclosed that it expected a $5.5 billion hit this quarter due to a new US licensing requirement on the primary H20 chip it can legally sell in China.

Nvidia, AMD Stocks

Chipmaker Nvidia’s shares fell 6.5 per cent in premarket trading after it said the U.S. had imposed stricter controls on its exports of one of its computer chips designed for use in artificial intelligence. Rival chipmaker AMD's shares dropped 6.8 per cent.


Trade war concerns also were revived by a Trump administration announcement of an investigation into imports of critical minerals such as rare earths, which are used in smartphones, electric vehicles and many other products.

Why Is Nvidia Stock Dropping Today?

Nvidia sank after saying the U.S. government is restricting exports of its H20 chips to China, citing worries that they could be used to build a supercomputer.

Stacy Rasgon, a Bernstein analyst, said banning the H20 Chip 'makes no sense' as it would hand over the Chinese AI market to rivals Huawei. "The impact of a full H20 wipeout is probably (about)30 cents or so at current levels (not enormous in the grand scheme of things)," Rasgon said.

U.S. officials have been aiming to prevent the sale of critical chip to China in an effort to maintain a competitive edge in the AI race.

FAQs

Q1. How are Nvidia’s shares performing?
A1. Chipmaker Nvidia’s shares fell on Wednesday 6.5 per cent in premarket trading.

Q2. What is USA government's stance on AI Chip?
A2. U.S. officials have been aiming to prevent the sale of critical chip to China in an effort to maintain a competitive edge in the AI race.