Washington’s tightened grip on artificial intelligence chip sales to China could have long-term implications for Nvidia , 2023’s famed AI darling. Chip stocks sold off earlier this week after the U.S. Commerce Department announced new curbs on AI chip exports to China in a continued effort to slow its access to advanced computing power, and close loopholes that appeared following a ruling last year . Through Wednesday’s close, Nvidia, the dominant AI player, had lost 7% this week, while Advanced Micro Devices and Marvell Technology slumped more than 2%. Some names recovered Thursday. NVDA mountain 2023-10-16 Nvidia’s weekly performance While the latest export restrictions should have little immediate impact, analysts and portfolio managers say a continuation of the Commerce Department rules could dent in significant sales opportunities over the long-run for many popular chipmakers, or lead China to retaliate. Already, investors point to actions earlier this year, when Chinese authorities barred operators of “critical information infrastructure” from buying Micron Technology ‘s products, referring to the Boise, Idaho-based maker of DRAM and NAND chips as a “major security risk.” “China is a big market for them,” said Greg Bassuk, chief investment officer at AXS Investments. “This is going to have staying power.” What it means for Nvidia Nvidia said in an SEC filing this week that the latest government curbs could hinder its new product development timeline, and a handful of chip models. The new restrictions extend beyond the latest-generation H100 product fueling many large language models used in artificial intelligence, and will even prevent the sale of less sophisticated H800 and A800 models previously sold in China. The major aim of the latest U.S. restrictions is to prevent China from harnessing advanced semiconductor chips to strengthen its military. But it isn’t the only nation affected, with the ruling adding licensing requirements for countries ranging from Vietnam to Saudi Arabia and the United Arab Emirates. The heightened government limits led some Wall Street investment banks to trim their price targets on shares of Nvidia to account for slowing sales. Citi analyst Atif Malik, for example, cut his Nvidia price objective to $575 from $630 this week, while Morgan Stanley’s Joseph Moore trimmed his target by $30 to $600, saying that restrictions to areas such as Saudi Arabia appear a greater threat to revenue than initially expected. While…
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