The Nvidia stock (NASDAQ: NVDA) experienced a drop of nearly 2% on Monday, closing at $133.23. This drop comes as the Biden administration announced updated regulations targeting the export of artificial intelligence (AI) chips. The move is aimed at restricting advanced AI technology from reaching nations like China.
Nvidia Stock Struggles Amid New AI Chip Regulations
The White House issued a statement emphasizing the importance of AI in both national security and economic growth, declaring, “The United States must act decisively to lead this transition by ensuring that U.S. technology undergirds global AI use and that adversaries cannot easily abuse advanced AI.”
The updated export rule imposes a cap on the number of AI chips that can be shipped to most nations without special authorization. Shipments of 1,700 GPUs or fewer are excluded from the cap. A total compute capacity limit of 790 transistors per square millimeter has been set for AI chip exports to countries not facing outright bans, according to analysts at Bernstein. This measure applies to nations including Switzerland and Israel.
In a note to investors, Bernstein analyst Stacy Rasgon provided context, explaining that the cap equates to around 50,000 Nvidia Hopper chips or 20,000 Blackwell chips. By comparison, major tech companies like Microsoft and Meta made significant purchases of Nvidia’s AI chips last year, acquiring 485,000 Hopper GPUs and 224,000 Hopper GPUs, respectively.
Eighteen allied nations, including the United Kingdom, Netherlands, and Taiwan, are exempt from these restrictions. However, 24 countries subject to arms controls, such as China, Russia, and North Korea, remain barred from accessing the latest AI technology.
The White House clarified that the restrictions are designed to address gaps in earlier measures from 2022 and 2023. A statement from the administration highlighted the goal of “thwarting smuggling” and enhancing AI security measures.
DA Davidson analyst Gil Luria commented on the potential impact of the new rules. In an email, he wrote “[These restrictions] will make it even more difficult for Chinese entities to purchase the most advanced NVIDIA chips,” according to a Yahoo! Finance report.
As of the trading session on Monday, January 13, 2025, Nvidia’s stock closed at $133.23, reflecting a decline of 1.97%. After-hours trading saw a slight rebound, with the stock rising 0.67% to $134.12 by 4:48 PM EST.
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