Nvidia Corp took a $5.5 billion earnings hit and saw its shares tumble after disclosing late Tuesday that new US export restrictions will indefinitely block shipments of its H20 artificial intelligence chips to China — a development that prompted CNBC’s Jim Cramer to declare the company had become a “meme stock” and should be trimmed from portfolios.
The Silicon Valley chipmaker said in a regulatory filing that it was notified by US officials on April 9, and again on April 14, that its H20 semiconductors — already designed to comply with prior Biden-era export controls — will now require special licences due to concerns they could be used in Chinese supercomputers. The US Department of Commerce confirmed the new licensing rules late Tuesday, citing national and economic security.
Nvidia shares dropped 6% in after-hours trading, and were down 7% in Wednesday’s pre-market session. The Nasdaq 100 futures slipped more than 2% as the news reverberated across global tech markets. Shares in Nvidia rival AMD fell 7%, while chip equipment maker ASML lost 6%. AI chip buyers in Hong Kong, including Alibaba, Baidu, and Tencent, also declined.
The $5.5 billion charge relates to “inventory, purchase commitments, and related reserves” for H20 products in the quarter ending April 27, the company said.
Jim Cramer, the outspoken host of CNBC's Mad Money, weighed in on the news, taking to social media platform X to issue a warning. “As I said in my painful Sunday think piece for club members, Nvidia has become a meme stock and it has to be cut back,” Cramer wrote. “You can’t own Nvidia like you used to, meaning you have to trim, and I said I’m going to have to sell some... It’s a different world,” he said in his show, answering callers' stock questions.
Nvidia introduced the H20 chip last year to navigate restrictions that banned the export of its most advanced GPUs to China. Despite being a pared-down product, the H20 accounted for $12 billion of the company’s $17 billion in China revenue over the past year, according to Bernstein analysts. Reuters reported the chip had received $18 billion in orders this year alone.
Yet Nvidia did not warn at least some of its Chinese customers about the new restrictions in advance, according to a Reuters exclusive citing sources familiar with the matter. Cloud companies in China, including Tencent and Alibaba, were reportedly expecting deliveries of the H20 chip by year-end.
The export curbs are part of the Trump administration’s broader effort to stifle China’s technological advancements. The White House has ramped up tariffs on Chinese goods to as high as 145% and is pursuing a national security probe that could lead to new levies on semiconductors. Commerce officials confirmed that AMD’s MI308 and similar chips are also subject to the new licensing regime.
The administration said the controls aim to prevent Chinese access to semiconductors that could be used in military applications such as hypersonic and nuclear weapons development. The Chinese embassy in Washington did not comment.
Nvidia’s exposure to geopolitical flashpoints has grown alongside its meteoric rise in the AI boom, which briefly saw it crowned the world’s most valuable company last year. On Monday, the company announced plans to invest up to $500 billion in U.S. AI infrastructure, partnering with Taiwan Semiconductor Manufacturing Co. and Foxconn.
But with Washington's crackdown intensifying and Beijing encouraging domestic alternatives, analysts warn Nvidia could face an extended freeze-out in China. The company’s China-focused H20 was already being targeted by new energy-efficiency rules, potentially favoring local players like Huawei.
As markets brace for further turbulence, uncertainty remains over whether Nvidia will receive any export licences or if the H20 chip line will be effectively wiped out in China — one of its most critical markets, accounting for 13% of total revenue in the last fiscal year.
Also read | European shares fall after Nvidia, ASML signal mounting corporate pain
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
The Silicon Valley chipmaker said in a regulatory filing that it was notified by US officials on April 9, and again on April 14, that its H20 semiconductors — already designed to comply with prior Biden-era export controls — will now require special licences due to concerns they could be used in Chinese supercomputers. The US Department of Commerce confirmed the new licensing rules late Tuesday, citing national and economic security.
Nvidia shares dropped 6% in after-hours trading, and were down 7% in Wednesday’s pre-market session. The Nasdaq 100 futures slipped more than 2% as the news reverberated across global tech markets. Shares in Nvidia rival AMD fell 7%, while chip equipment maker ASML lost 6%. AI chip buyers in Hong Kong, including Alibaba, Baidu, and Tencent, also declined.
The $5.5 billion charge relates to “inventory, purchase commitments, and related reserves” for H20 products in the quarter ending April 27, the company said.
Jim Cramer, the outspoken host of CNBC's Mad Money, weighed in on the news, taking to social media platform X to issue a warning. “As I said in my painful Sunday think piece for club members, Nvidia has become a meme stock and it has to be cut back,” Cramer wrote. “You can’t own Nvidia like you used to, meaning you have to trim, and I said I’m going to have to sell some... It’s a different world,” he said in his show, answering callers' stock questions.
Nvidia introduced the H20 chip last year to navigate restrictions that banned the export of its most advanced GPUs to China. Despite being a pared-down product, the H20 accounted for $12 billion of the company’s $17 billion in China revenue over the past year, according to Bernstein analysts. Reuters reported the chip had received $18 billion in orders this year alone.
Yet Nvidia did not warn at least some of its Chinese customers about the new restrictions in advance, according to a Reuters exclusive citing sources familiar with the matter. Cloud companies in China, including Tencent and Alibaba, were reportedly expecting deliveries of the H20 chip by year-end.
The export curbs are part of the Trump administration’s broader effort to stifle China’s technological advancements. The White House has ramped up tariffs on Chinese goods to as high as 145% and is pursuing a national security probe that could lead to new levies on semiconductors. Commerce officials confirmed that AMD’s MI308 and similar chips are also subject to the new licensing regime.
The administration said the controls aim to prevent Chinese access to semiconductors that could be used in military applications such as hypersonic and nuclear weapons development. The Chinese embassy in Washington did not comment.
Nvidia’s exposure to geopolitical flashpoints has grown alongside its meteoric rise in the AI boom, which briefly saw it crowned the world’s most valuable company last year. On Monday, the company announced plans to invest up to $500 billion in U.S. AI infrastructure, partnering with Taiwan Semiconductor Manufacturing Co. and Foxconn.
But with Washington's crackdown intensifying and Beijing encouraging domestic alternatives, analysts warn Nvidia could face an extended freeze-out in China. The company’s China-focused H20 was already being targeted by new energy-efficiency rules, potentially favoring local players like Huawei.
As markets brace for further turbulence, uncertainty remains over whether Nvidia will receive any export licences or if the H20 chip line will be effectively wiped out in China — one of its most critical markets, accounting for 13% of total revenue in the last fiscal year.
Also read | European shares fall after Nvidia, ASML signal mounting corporate pain
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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