NVIDIA May Be Forced to Cancel $5 Billion Chinese Order
NVIDIA May Be Forced to Cancel $5 Billion Chinese Order
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NVIDIA May Be Forced to Cancel $5 Billion Chinese Order
The U.S. Department of Commerce appears to have brought significant trouble to NVIDIA, notifying the company that its approximately $5 billion worth of orders for AI chips to China falls under the United States’ latest export restrictions.
It is reported that the intended recipients of these orders are Alibaba, ByteDance, Baidu, and potentially other major Chinese tech companies.
This caused a sharp drop in NVIDIA’s stock price when the U.S. stock market opened earlier today, with a decrease of nearly 5%. NVIDIA’s market value fell below the $1 trillion mark. The stock price recovered somewhat in the afternoon, allowing NVIDIA to re-enter the trillion-dollar club.
NVIDIA’s stock price reached a low of $392.30, marking a 4.7% decline, the lowest level since mid-June. The stock has been a significant driver of the Nasdaq index’s 22% increase this year, but it has fallen nearly 20% from its all-time high closing price of $493.55 on August 31.
Tom Plumb, CEO and Chief Investment Officer of Plumb Funds, said, “This stock has been oversold.”
According to a statement from Reuters, NVIDIA seems to be relatively unconcerned, despite the apparent significant loss in revenue. A company spokesperson issued the following statement: “These new export control measures will not have a meaningful impact in the short term.”
The U.S. government will implement these new export restrictions starting in November, and it seems that NVIDIA has limited opportunities to avoid these restrictions. The company will have to look for new customers for its AI chips. Given the current demand for NVIDIA chips, this may not be too significant of a challenge for the company.
