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The ongoing rally in semiconductor stocks such as Intel, AMD, and particularly NVIDIA, is at risk now that the US political machinery is mulling additional retaliatory measures against China.
To wit, the Wall Street Journal is now reporting that the Biden administration is considering banning the sale of AI chips to China.
Back in September, the US Commerce Department banned the sale of NVIDIA’s A100 and H100 chips to the Asian giant. AMD’s MI250 chips were also placed under export licensing regime while exempting the MI100 chips from such requirements.
“The Commerce Department could move as soon as early next month to stop the shipments of chips made by Nvidia and other chip makers to customers in China and other countries of concern without first obtaining a license, the people said.” https://t.co/ewiM3z9dKe
— Shashank Joshi (@shashj) June 28, 2023
This time around, the Biden administration is considering banning even the sale of A800 chips to China without an export license. The ban might even extend to the provision of cloud services to Chinese AI companies, which have used such a cover in the past to skirt restrictions on advanced semiconductors.
It is hardly a surprise, therefore, that NVIDA shares are down nearly 3 percent in today’s after-hours trading. AMD shares are down nearly the same amount, while Intel shares are down around 1 percent.
Bear in mind that NVIDIA has been up around 200 percent since the start of the year, egged on by expectations that the company corner a significant chunk of the AI training market via a dedicated suite of products under the ambit of its AI Foundation Services to enable clients to create and run customized generative AI models. According to JP Morgan, the chipmaker would remain the primary beneficiary of AI-related spending this year, scooping up as much as 60 percent of the proverbial pie.
Meanwhile, Morgan Stanley has now replaced AMD with NVIDIA as its “top pick” stock, pegging a share price target of $500. Morgan Stanley analyst Joseph Moore cited the stock's "higher probability of upward revisions near term" as the primary catalyst for this upgrade.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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