Nvidia (NVDA) stock tumbled Wednesday after China ordered local companies to stop buying its chips. That news rattled other makers of AI processors as well. But some AI chip stocks are rising or holding tight.
China’s internet regulator ordered the country’s biggest tech companies, including Alibaba (BABA) and ByteDance, to stop buying Nvidia’s AI chips, the Financial Times reported Wednesday. Previously, Beijing strongly urged local firms to not purchase Nvidia chips.
China is seeking to boost its domestic semiconductor industry, including Chinese chipmakers Huawei and Cambricon, the FT said. The U.S. has banned exports of advanced chips and chipmaking equipment to China, but has allowed sales of throttled processors and older gear.
“We can only be in service of a market if the country wants us to be,” Nvidia Chief Executive Jensen Huang told reporters in London. “I’m disappointed with what I see. But they have larger agendas to work out, between China and the U.S., and I’m understanding of that. We are patient about it.”
Mizuho Securities trading-desk analyst Jordan Klein said he thinks China’s moves are “pure posturing.”
“China media and government agencies (are) clearly working overtime this week to gain as much leverage against (the) U.S. as possible during ongoing and future trade negotiations,” Klein said in a client note. It “is nothing more than a full-court PR assault by China against (the) U.S. to show they can and want to go solo in AI and can do much more domestically.”
In midday trades on the stock market today, Nvidia stock fell nearly 3% to 169.81. Fellow AI chipmakers Advanced Micro Devices (AMD) and Broadcom (AVGO) also slid Wednesday.
Nvidia Stock, AI Chip Stocks On IBD Lists
Meanwhile, other chipmakers that supply products for data centers running artificial intelligence applications have seen their shares rise or remain steady.
Shares of Astera Labs (ALAB) and Credo Technology (CRDO), makers of high-speed connectivity chips, are trading in record-high territory.
Memory-chip makers Micron Technology (MU) and Rambus (RMBS) also are holding up well.
Nvidia stock is on four IBD lists: IBD 50, Sector Leaders, Stock Spotlight and Tech Leaders.
Other AI chip stocks are on multiple IBD stock lists as well.
Astera Labs is on four IBD lists: IBD 50, Big Cap 20, IPO Leaders and Tech Leaders. Credo is on Big Cap 20 and Tech Leaders.
Micron is on IBD 50, Leaderboard and Tech Leaders. Rambus is on IBD 50 and Tech Leaders.
Broadcom is on Leaderboard and Tech Leaders. And AMD is on Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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