16.04.25 - Nvidia will record a USD 5.5bn charge

After market close on Tuesday, Nvidia said that it will take a quarterly charge of about USD 5.5 billion tied to exporting H20 graphic processing units to China and other destinations. The US government said it would require licenses for exports to China of its H2O artificial intelligence chips. This chip is one of Nvidia’s most popular.

During President Biden’s administration, the US restricted AI chip exports in 2022 and the updated the rules the following year to prevent the sale of more advanced AI chips.

Markets: Nvidia tumbles more than 5% in extended trading, dragging the Nasdaq Future down more than 1%.

My view: This is a sign, that Nvidia’s growth story could be slowed by increasing export restrictions on its chips. The chips could be used to create supercomputers for military uses. Why some restrictions in current environment of global tensions could make sense.

However, Nvidia’s disclosure could hit the semiconductor sector and overall market in its current vulnerable conditions.
I therefore expect more downside from here, why remaining short positioned in this specific sector and for tech stocks.

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