NVIDIA and AMD Stocks Surge as Trump Repeals Biden's AI Export Rules—But New Risks Loom

The U.S. semiconductor sector is bracing for a seismic shift as the Trump administration moves to repeal the Biden-era "AI diffusion rule," a policy aimed at curbing AI chip exports to China. While the decision has sent shares of NVIDIA (NVDA) and AMD (AMD) soaring, the regulatory landscape remains fraught with uncertainty due to potential new tariffs and global licensing regimes. Investors must weigh the immediate relief against looming challenges that could redefine the sector’s trajectory.

The Immediate Impact: A Reprieve for Chipmakers

The Biden administration’s final act in January 2025 imposed a tiered export control system for advanced AI chips, aiming to prevent smuggling to China and restrict U.S. companies from expanding abroad. The Commerce Department labeled the rule “overly complex,” arguing it stifled innovation. Its repeal has sparked a rally in NVIDIA and AMD shares, with NVIDIA rising 1.5% in premarket trading and AMD gaining 1.6% on news of the reversal.

This reversal aligns with industry demands: both companies had lobbied against the Biden rule, citing stifled growth. NVIDIA’s stock had already climbed 3% earlier in the week after Bloomberg first reported the repeal. However, the broader context is stark: existing Trump-era policies, including export bans to China, have already caused NVIDIA’s shares to plummet 13% and AMD’s to drop 17% in 2025.

The Financial Toll of Prior Policies

The repeal’s positive impact is tempered by lingering financial scars. NVIDIA faces a $5.5 billion charge in its fiscal first quarter due to U.S. licensing requirements for selling its H200 chips to China. AMD, meanwhile, projects a $1.5 billion revenue hit in 2025 from tightened Chinese sales restrictions. These figures underscore the precarious balance between regulatory relief and ongoing trade barriers.

The New Threats: Tariffs and Licensing Regimes

While the Biden rule is gone, the Trump administration is exploring stricter alternatives. Reuters reports that officials are considering a global licensing regime for chip exports, which could centralize AI chips into tariff negotiations—a move Citi analyst Atif Malik warns “could be more strict than Biden’s policy.”

Adding to the uncertainty, the Commerce Department is weighing semiconductor tariffs as high as 25%, potentially effective by July. Such tariffs would complicate enforcement, as most chips enter the U.S. embedded in finished goods like servers and smartphones.

NVIDIA’s VP of government affairs, Ned Finkle, criticized the Biden rule for “rigging market outcomes,” while AMD CEO Lisa Su urged policymakers to balance national security with market access. NVIDIA CEO Jensen Huang warned that exclusion from China’s AI market—a risk under prior bans—would be a “tremendous loss.”

Conclusion: A Delicate Dance Between Relief and Risk

The repeal of Biden’s AI diffusion rule offers immediate relief for NVIDIA and AMD, but investors must parse the broader picture. While shares have rallied, the specter of 25% tariffs and a global licensing regime threatens to offset gains.

Key data points reinforce this duality:
- Short-Term Gains: NVIDIA’s 3% jump this week and AMD’s 1.6% premarket surge reflect investor optimism about reduced bureaucratic hurdles.
- Long-Term Headwinds: NVIDIA’s $5.5B charge and AMD’s $1.5B loss highlight the financial toll of existing policies, suggesting even minor regulatory missteps could amplify pain.

The Commerce Department’s new rules, still in draft form, could swing the sector’s fortunes. For now, the path forward is clear: chipmakers gain breathing room, but the race to dominate AI hinges on navigating a labyrinth of trade policies. Investors should remain cautious, as the interplay of tariffs and licensing regimes may redefine the sector’s winners and losers by late 2025.

In short, the repeal is a victory—but the battle for AI dominance is far from over.