New US Chip Export Restrictions Send Nvidia Stocks Tumbling
Recent US government rules disrupt Nvidia's business with China, causing a drop in stock value. Explore the impact and future implications for the tech giant.
Nvidia, a company known for its smart computer chips, is facing a problem. The US government, led by President Biden, has decided to stop sending special chips that help with smart technology to China. Because of this news, Nvidia's business has taken a hit. The value of their company dropped by almost 5%. In simple words, their business is not doing as well as before.
A group of smart people who study businesses, called analysts, think it's unlikely that the US government will allow Nvidia to send these chips to China. This has led them to guess that Nvidia won't make as much money in the years 2025 and 2026.
One of these analysts from a big bank called Citi, Atif Malik, said, "We think the new rules will make it hard for Nvidia to sell to China." Because of this, Citi changed their guess for how much Nvidia's stock will be worth in one year. They used to say it would be $630, but now they say it will be $575. However, they still think it's a good idea to buy Nvidia's stock because they believe that smart technology is going to become even more popular.
Even though Nvidia's value has dropped from its highest point in the last year, they are still doing pretty well. They're about 12% lower than their highest value. This happened after they told everyone that they made a lot of money in August. They don't think this new rule from the US government will hurt their business too much this time. They say that people all over the world still really want to buy Nvidia's products.
However, in the future, things might not be so easy. Nvidia says that they might have a tough time making new products, helping people who already have their products, and sending their products to places affected by the new rule. They might even have to move some parts of their business out of certain countries.
Nvidia also mentioned that even if they ask for special permission to send these chips, they can't be sure they'll get it. And even if they do, they're not sure if the US government will say yes quickly. So, they're in a bit of a tricky situation right now.
Also Read: U.S. Commerce Department New Rules Aim to Keep Advanced Computer Chips Away from China
