Nvidia’s stock fell 4% on Wednesday after reports emerged that the Trump administration officials would be "exploring additional curbs" on its chip sales to China.
Nivida to collaborate with the Trump Administration
According to Bloomberg, Nvidia would collaborate with the US government, stating that the thresholds set by the Biden administration were based on technology that reached performance levels five years ago, which were already achieved by leading gaming and workstation products.
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This comes at a time when Nvidia shares are volatile. Nvidia's worst one-day market cap loss in history was on Monday, with shares plummeting nearly 17%, reported Bloomberg.
DeepSeek challenges Nvidia's dominance
Nvidia shares dropped after investors grew concerned about a new, cost-effective AI model developed by the Chinese startup DeepSeek, which could potentially challenge Nvidia’s dominance in the AI chip market, as per reports. DeepSeek’s model reportedly uses cheaper chips and fewer data resources, raising fears that it could hurt Nvidia's future sales and shake up the growing trend of AI-driven profits among major tech firms.
Despite a 9% rebound on Tuesday, many analysts still consider the stock's recent fluctuations as reflective of deeper uncertainty. The latest dip on Wednesday, following the news of potential new export controls, showed that Nvidia’s road to recovery is far from certain, reported Bloomberg.
As investors continue to monitor the situation, all eyes will be on major Nvidia clients like Tesla, Microsoft, and Meta, who are expected to offer more insights into the current demand for AI chips.
FAQs:
Why did Nvidia's stock drop further on Wednesday?
The stock fell after news broke that the US government might impose additional restrictions on Nvidia’s chip sales to China, sparking concerns about the impact on future sales.
What’s the concern with DeepSeek’s AI model?
Investors are worried that DeepSeek's cheaper AI model could challenge Nvidia’s dominance in the chip market, potentially hurting its future earnings and market share, as per reports.
Source Name : Economic Times