Nvidia (NVDA) shares fell as much as 2.8% in pre-market trading Monday as investors continued to absorb news that Chinese regulators are reportedly discouraging local companies from buying Nvidia’s AI chips.
The stock pared losses after the bell, down around 1.4% to around $120.
Bloomberg reported Friday afternoon that Beijing is urging Chinese companies to buy from chipmakers within its own borders — rather than Nvidia’s popular GPUs — amid heightened trade tensions with the US. Nvidia shares ended the day down 2.2% to $121 and fell further early Monday. Meanwhile, Chinese AI chipmaker Cambricon Technologies (688256.SS) surged 20% in Monday trading.
Nvidia did not immediately respond to questions from Yahoo Finance.
The US enacted tougher export controls on AI chips to China in late 2022 — and has continued to tighten those rules in attempt to hinder China’s ability to surge ahead in the so-called AI arms race. Nvidia has felt the impact: sales to China made up 14% of data center revenue during the company’s fiscal year ended Jan 28, 2024, compared to 19% the prior year.
Nvidia has responded by attempting to work around those roadblocks by creating specific versions of its chips for China, which comply with the stricter controls.
Its “H20” Hopper chips for China launched this year — and are forecast to generate $12 billion in revenue for the company this year. Nvidia is also set to launch a version of its latest Blackwell chip, called “B20,” for China. A release date has not been set. In the meantime, the black market for Nvidia chips has taken off.
Nvidia sales in China have recovered in recent quarters. Revenue from sales in China totaled about $3.7 billion in the most recent quarter ended July 28, up 33.8% from the prior year, according to Bloomberg estimates. Nvidia shares are up 144% since the start of the year.
Analysts remain bullish on Nvidia despite historic volatility in the semiconductor sector. About 90% of Wall Street analysts recommend buying the stock and see shares rising to $147.61 over the next year, according to Bloomberg consensus estimates.
Daniel Newman, CEO of the Futurum Group, told Yahoo Finance that there is “strong optimism right now from the top leaders” in the semiconductor sector. He noted that Nvidia stock has been more volatile since its 10-for-1 stock split in June.
Laura Bratton is a reporter for Yahoo Finance.
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