- New U.S. export controls on chips, described by Dan Ives as the start of a deeper U.S.-China trade war, led to a 6.7% drop in Nvidia’s stock this morning and a projected 10% cut in revenue forecasts, with China’s contribution nearing zero.
- AMD faces a more severe impact than Nvidia, with a quarter of its revenue from China at risk, while ASML’s shares fell due to tariff-related booking declines, reflecting broad semiconductor sector challenges.
- The tech sector braces for a turbulent three-to-six-month period, with unreliable near-term projections and no clear resolution timeline, though Ives maintains the long-term investment thesis remains intact for those navigating the uncertainty.
The intensifying U.S.-China trade war, marked by new export controls on advanced chips, has sent shockwaves through the semiconductor industry, with Nvidia (NVDA), AMD (AMD), and ASML Holding (ASML) facing significant pressure due to their exposure to the Chinese market. Dan Ives, Global Head of Technology Research at Wedbush Securities, emphasized on CNBC that the U.S. restrictions, particularly on Nvidia’s AI chips, signal a strategic blockade, effectively reducing China’s contribution to Nvidia’s revenue to near zero. Nvidia’s stock dropped nearly 7% premarket in response, with Wall Street factoring in a 10% cut in projections, reflecting the market’s expectation of a prolonged disruption.
AMD faces an even steeper challenge, with Ives noting that the export controls are more consequential for the company due to a significant portion of its revenue – approximately a quarter – stemming from China. The resulting sell-off in AMD’s shares is expected to outpace Nvidia’s, as the restrictions deliver a “gut punch” to its financial outlook. The broader chip sector is bracing for a 10% reduction in forecasts across the board, as analysts adjust to the reality of restricted access to one of the world’s largest markets.
ASML, the leading global supplier of chip-making equipment, is also reeling from the trade war’s fallout, with its shares declining after reporting weaker-than-expected bookings, partly attributed to U.S. tariffs. Ives described the current environment as a “game of high-stakes poker” between the U.S. and China, with no clear timeline – ranging from 30 to 90 days or longer – for resolution. He cautioned that tech companies, including ASML, are unlikely to provide guidance in this uncertain climate, likening the forecasting process to “playing darts blindfolded.”
The broader tech sector is not immune, with Ives warning of a turbulent three-to-six-month period that could render near-term financial projections unreliable. While a temporary exemption for smartphones, laptops, and chips provided brief relief, the reimposition of restrictions underscores the volatility ahead. Ives stressed that the long-term investment thesis for tech remains intact, but only for those who can “look through the storm.” He highlighted Nvidia’s critical role in fueling the AI revolution, noting that its chips are a unique asset in the global tech landscape, making the U.S. restrictions a calculated move in the escalating trade conflict.
Without a negotiated deal with China, the trajectory of the trade war could fundamentally alter the tech industry’s outlook, potentially ceding ground to Chinese competitors. For now, the sector faces a messy few quarters, with Wall Street and investors forced to navigate what Ives calls “the eye of the storm” in the U.S.-China chip war. The stakes are high, and the outcome of this geopolitical chess match will shape the future of global technology markets.
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