Chip stocks like Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Applied Materials (NASDAQ:AMAT) are all down today as well as trending on social media. The current retreat in shares comes amid reports that the U.S. is considering further restrictions on the sale of artificial intelligence (AI) chips to China.
Indeed, the government seems to be weighing increased curbs on the export of AI chips to China, according to The Wall Street Journal. The restrictions, which could weigh on chip stocks for some time, could be set in motion by the Commerce Department “as soon as early next month.”
The department previously restricted the sale of the most advanced AI chips, but the new rule would take the restrictions even further, forcing Nvidia to obtain a license for the less advanced chips that it has been selling to the Chinese market.
NVDA Stock: Analysts Assess Potential Impact
In a note to investors, Citi analyst Atif Malik reported that the chipmaker’s revenue from Chinese data centers was between $1.5 billion and $3 billion, or “in the 5-10% range of total $30 billion data center sales this year.” However, Malik added that the firm overall believes “AI demand will exceed supply this year and Nvidia can move its chips around.”
Similarly, Bank of America analyst Vivek Arya recently noted that Nvidia’s “strength from US hyperscale customers could soak up any additional product availability.” Arya has a $500 price target and “buy” rating on NVDA stock.
As of this writing, Nvidia is down about 1% in early trading. In the last three months, however, the stock has risen more than 50%. Shares have also soared more than 180% so far this year.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
