Nvidia shares moved lower again in early Monday trading following a big change in AI technology export rules and a price target change from a top tech analyst on Wall Street.
Nvidia (NVDA) shares are likely to slip into correction territory at the start of trading, defined as a 10% decline from a recent closing high, amid a broader market pullback tied to the surge in Treasury yields and new restrictions in AI exports unveiled by the outgoing administration of President Joe Biden.
The new rules will limit exports of AI technologies to some countries, including Singapore, Israel, Saudi Arabia and the United Arab Emirates, while maintaining outright bans on sales to Russia, Iran, China and North Korea.
“The US leads the world in AI now — both AI development and AI chip design — and it’s critical that we keep it that way,” said Commerce Secretary Gina Raimondo.
Nvidia has called new the new US export restrictions in AI technologies “regulatory morass, drafted in secret and without proper legislative review.”
Nvidia called the complicated new rules a “regulatory morass” and accused the Biden administration of “undermining America’s leadership” in AI technologies.
Nvidia slams new AI export rules
“By attempting to rig market outcomes and stifle competition—the lifeblood of innovation—the Biden Administration’s new rule threatens to squander America’s hard-won technological advantage,” the group said in a blogpost penned by vice president of government affairs Ned Finkle.
The group generates around 40% of its overall sales to markets in the US, with around 15% each from markets in Taiwan and China.
Nvidia shares were also pressured by a new note from HSBC analyst Frank Lee, who argues that the AI market leader will likely face headwinds over the first half of its fiscal year, which begins in February, that will require a second-half acceleration to offset.
Lee, who clipped his price target on rival Advanced Micro Devices (AMD) last week, kept his ‘buy’ rating on Nvidia in place but lowered his price objective by $10, to $185 per share, in a note published Monday.
“Given potentially weaker momentum [in the first half of the coming fiscal year], we believe Nvidia will be under increasing pressure to deliver an even stronger [second half] ramp of its GB300/B300 platform to meet expectations,” Lee and his team wrote.
Nvidia server racks sales in focus
Lee cut his forecast for data center revenue over the coming fiscal year, where Nvidia generates the bulk of its sales, by around $17 billion to $236 billion, but notes that projection remains firmly above the Wall Street consensus.
Nvidia combines its new Blackwell line of GPUS into a so-called ‘server rack’ in order to create a more efficient system that is capable of handling higher AI workloads.
Lee sees the group selling around 35,000 of the NVL 72 AI server racks, down from his prior forecast of around 41,500.
“But even on bear-case scenarios of only 20,000-25,000 NVL racks in [the coming fiscal year], our implied bear-case for EPS of $4.84-$5.14 remains 8%/14% above consensus of $4.50,” he added.
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Nvidia, which guides investors on revenue and profit forecasts for only the coming quarter, sees an end-January revenue tally of $37.5 billion, with analysts pegging its data-center total for fiscal 2025 at $113.36 billion.
In terms of its Blackwell processors alone, Wall Street analysts expect several billion of revenue in Nvidia’s fourth quarter, with totals of $62 billion in 2025 and $97 billion in 2026.
Nvidia shares were last marked 3.25% lower in premarket trading to indicate an opening bell price of $131.49 each.
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