Nvidia (NVDA.US) shares have surged nearly 25% from the early April lows, but today they are down almost 6% in pre-market trading in the U.S. The decline is driven by costly new export restrictions on the company’s chips bound for China.
In addition to Nvidia, several other semiconductor stocks are also trading lower by a few percent, including AMD (AMD.US), Broadcom (AVGO.US), Intel (INTC.US), and Super Micro Corp (SMCI.US). The sector is also weighed down by weak results from ASML (ASML.NL), which triggered a more than 6% drop in the shares of the key European chipmaker.
- Yesterday, Nvidia disclosed that it expects to incur $5.5 billion in charges that will weigh on its upcoming quarterly report. On Monday, the company announced a $500 billion investment plan to build AI supercomputers exclusively within the United States. However, this did not shield it from penalties imposed by the new U.S. administration.
- The trigger is a fresh round of American export restrictions on chips destined for China. The U.S. government has decided to require licenses for exports of the H20 chip to China, including Hong Kong and Macau, as well as to countries whose Nvidia clients are subsidiaries of companies based in those regions.
- On April 9, 2025, the U.S. government informed the company that a license would be mandatory for exporting H20 integrated circuits—or any with similar memory and interconnect bandwidth capabilities. Then, on April 14, 2025, it was clarified that this license requirement would remain in place indefinitely.
- The aim of the new restrictions is to prevent Nvidia products from being used in Chinese supercomputers or military applications. The $5.5 billion financial charge reported by Nvidia relates to inventory, purchase commitments, and associated reserves tied to H20 products.
Wedbush analysts noted that while the financial blow itself is relatively small, it complicates the strategic outlook for Nvidia’s business expansion. The H20 chip was the most important AI processor that Nvidia was legally allowed to sell in China. Trump’s decision will now subject that chip to restrictions. According to The Information, Chinese tech giants including Alibaba, ByteDance, and Tencent placed H20 orders worth more than $15 billion in the current quarter. Nvidia will no longer be able to fulfill them.
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Nvidia shares are expected to open today around the $100 mark. Depending on the market’s reaction at the open, we may see further downside or a potential rebound attempt. The stock remains in a medium-term downward channel that has been in place since December 2024. The recent upswing halted near the upper boundary of that price channel and the 200-period EMA (red line) on the hourly chart. In an extreme scenario, the stock could retest local lows near $85 per share.
Source: xStation5
Nvidia financial multiples dashboards
Source: Bloomberg Finance LP, XTB Research
