Nvidia Stock Plunges as Biden's AI Chip Export Restrictions Bite

Nvidia (NVDA) stock fell sharply on Monday, following the White House's announcement of new export restrictions on artificial intelligence processors. The regulations, designed to safeguard national security, limit the sale of advanced AI chips to most countries, including China. This move has drawn criticism from tech giant Nvidia and industry officials, who argue that the restrictions could derail innovation and economic growth worldwide.

The Biden administration published an interim final rule titled, "Export Control Framework for Artificial Intelligence Diffusion," which places additional restrictions on the sale of AI processors and systems. The rule restricts where the AI processors can be sold and in what quantities. Nvidia called the new restrictions "misguided" and warned that they threaten to squander America's hard-won technological advantage.

Nvidia stock declined more than 4% in morning trades on Monday, reaching $130.38. The stock had previously fallen below its 50-day moving average line, triggering a sell signal. The new regulations also impact Nvidia's rivals, including Advanced Micro Devices (AMD), Broadcom (AVGO), Marvell Technology (MRVL), and others.

The Semiconductor Industry Association (SIA) also condemned the Biden Administration's late regulatory move, stating that it risks causing unintended and lasting damage to America's economy and global competitiveness in semiconductors and AI. The new rule imposes global restrictions and onerous licensing requirements on U.S. exports of AI chips, which could cede strategic markets to competitors.



Nvidia's stock decline comes amidst a broader market sell-off, with the Dow Jones Industrial Average (DJIA) falling more than 300 points. The tech sector has been particularly vulnerable to regulatory risks, and the new AI chip export restrictions have added to the uncertainty.

The long-term impact of the new export restrictions on Nvidia's revenue and market share is not yet quantifiable. However, the company's robust long-term growth potential remains intact, driven by strong demand for GPU chips and early adopters starting to see ROI. Nvidia's data-center platform, which accounts for 76% of the company's total revenue, is expected to continue performing well despite the new restrictions.



Jim Cramer, host of CNBC's "Mad Money," called the new export restrictions "absurd" and suggested that they could hurt Nvidia's stock in the short term. However, he remains bullish on the company's long-term prospects, stating that Nvidia is a "must-own" stock for investors.

In conclusion, Nvidia's stock fell sharply on Monday following the White House's announcement of new export restrictions on AI chips. The restrictions, designed to safeguard national security, limit the sale of advanced AI chips to most countries, including China. Nvidia and industry officials have criticized the new regulations, arguing that they could derail innovation and economic growth worldwide. The long-term impact of the new export restrictions on Nvidia's revenue and market share is not yet quantifiable, but the company's robust long-term growth potential remains intact.