Can Nvidia Navigate the New U.S. Chip Restrictions to China?

Since posting a record high in August, shares of Nvidia (NVDA) have languished due to mounting headwinds for the company.  The steady increase in global interest rates has undercut most high-valued chip stocks, as the 10-year T-note yield posted a new 16-year high on Thursday. Also, new U.S. rules restricting cutting-edge technology to China threaten Nvidia, as 20% of the company’s revenue came from China last quarter.

The latest development to weigh on shares of Nvidia was Tuesday’s announcement by the Biden administration to keep advanced semiconductor chips out of China, including restricting Nvidia’s sale of processors explicitly designed for the Chinese market.  The latest regulations aim to prevent China from accessing technology that could have military applications.  Bloomberg Intelligence said, “Though the restrictions won’t greatly affect short-term estimates, they can erode Nvidia’s long-term prospects.”