TLDR
- Nvidia stock fell 1.1% in premarket trading Friday, capping a week where shares dropped more than 7% over five trading sessions
- CEO Jensen Huang confirmed no active discussions exist about selling Blackwell AI chips to Chinese customers
- The White House will not permit Nvidia to sell its scaled-down B30A AI chips to China, according to reports
- Beijing issued guidance requiring state-funded data center projects to use only domestically developed chips
- Concerns are growing about financing requirements for AI infrastructure after OpenAI’s $1.4 trillion spending commitment comments
Nvidia shares extended their weekly losses Friday, falling 1.1% in premarket trading to $186.01. The drop followed Thursday’s 3.7% decline and brought the stock’s five-day losses to more than 7%.
The chip maker’s troubles centered on two main issues. First, mounting concerns about AI infrastructure financing. Second, expanding restrictions on selling to Chinese customers.
Despite the weekly decline, Nvidia shareholders still hold a 40% gain for the year through Thursday’s close. The recent pullback marks a sharp reversal for the AI chip leader.
Questions about AI spending intensified after OpenAI CFO Sarah Friar suggested the company would welcome government support for its investments. CEO Sam Altman had to clarify Thursday that OpenAI doesn’t want federal guarantees for data centers or a bailout if it fails to meet $1.4 trillion spending commitments.
Thomas Shipp, head of equity research for LPL Financial, noted that earnings expectations continue growing. He wrote that momentum behind AI remains strong, though each dollar invested raises the bar for expected returns.
White House Blocks Latest Chip Sales
The White House informed federal agencies it will not permit Nvidia to sell its B30A chips to China. The Information first reported the decision Thursday, citing three sources.
Nvidia had already provided samples of the scaled-down chip to several Chinese customers. The B30A can train large language models when arranged in large clusters, a capability Chinese companies need.
The company is working on modifying the B30A’s design. Two employees told The Information that Nvidia hopes the administration will reconsider its position.
A Nvidia spokesperson told Reuters the company has “zero share in China’s highly competitive market for datacenter compute.” The company doesn’t include Chinese revenue in its guidance.
Beijing Issues New Restrictions
Chinese authorities issued fresh guidance Wednesday targeting foreign chips. The directive requires all new data center projects receiving state funding to use only domestically developed chips.
Data centers less than 30% complete must remove all installed foreign chips or cancel purchase plans. Projects in more advanced stages will face case-by-case review.
The guidance effectively blocks Nvidia and its AI chips from a valuable market segment. This includes advanced models under U.S. export controls that remain available through grey market channels in China.
Chinese regulators have also discouraged domestic customers from using Nvidia’s AI processors. The company forecasts zero Chinese revenue, implying a loss of $2 billion to $5 billion in potential quarterly sales.
Jensen Huang confirmed Friday there were “no active discussions” about selling Blackwell AI chips to Chinese customers. He made the comments during a visit to Taiwan, Reuters reported.
Other chip makers felt the pressure Friday. Advanced Micro Devices dropped 1.3% in premarket trading. Broadcom fell 1.1%.