Nvidia shares drop to five-month-low after report of canceled China orders

The logo of NVIDIA as seen at its corporate headquarters in Santa Clara, California, in May of 2022. Courtesy NVIDIA/Handout via REUTERS/File Photodropped by nearly 5% to a nearly five-month-low on Tuesday following a report that the artificial intelligence (AI) giant may be forced to cancel up to $5 billion worth of advanced chip orders to China in compliance with new U.S. government restrictions.

Nvidia was notified last week that AI chip orders scheduled for delivery next year to major Chinese technology companies, including Alibaba GroupNvidia’s stock fell to as low as $392.30, down 4.7%, to the lowest level since mid-June. The stock, which has been one of the major drivers of the gains in the Nasdaq, is now down nearly 20% from its record high close of $493.55 reached on Aug. 31.

“The stock is getting oversold,” said Tom Plumb, chief executive and lead portfolio manager at Plumb Funds, which has Nvidia as one of its largest holdings. “Previously, Nvidia has said this is not going to have a short-term impact but it’s more in the long term. We still expect a pretty strong quarter and think it’s a great long-term holding, although we are not adding any new positions because of the volatility,” Plumb added. headtopics.com

A Nvidia spokesperson said there is “high demand” for its advanced chips, which often require significant lead time to build, and that it is working to allocate orders to its “wide range of customers” in the U.S. and elsewhere.

“These new export controls will not have a meaningful impact in the near term,” the Nvidia spokesperson said in a statement.of more AI chips designed by Nvidia and others to China, a move designed to stop Beijing from receiving cutting-edge U.S. technologies to strengthen its military. headtopics.com

The new rules go into effect in November and included export controls to countries including Iran and Russia.

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