Following reports that the Trump administration is preparing additional curbs on Nvidia’s chip sales to China, likely covering the scaled-down H20 chips designed to meet existing US restrictions, the chipmaker’s stock fell 4% on Wednesday. Nevertheless, Nvidia confirmed its preparation to cooperate with the current administration.
The additional curbs report came after the chipmaker suffered the worst market cap loss in history. The launch of China’s DeepSeek’s cost-effective AI model, R1, had caught investors off guard, causing Nvidia’s stock to drop nearly 17% earlier this week.
The creators of R1 claimed that their AI model uses cheaper chips and less data, raising concerns among investors about future AI chip sales and the dominance of US hyperscalers in the market. Additionally, investors also worry that this development could negatively impact Nvidia and other Big Tech companies.
Nvidia shares rebounded 9% on Tuesday after Wall Street deemed the sell-off was “overblown,” but the additional curbs have shown the chipmaker is not out of the woods yet. Investors are now closely monitoring Nvidia’s customers, such as Tesla, Microsoft, and Meta, for insights into the current demand for AI chips.
