Nvidia, a company known for its smart computer chips, is facing a problem. The US government, led by President Biden, has decided to stop sending special chips that help with smart technology to China. Due to this news, Nvidia’s business has been affected. The value of his company fell almost 5%. In simple words, your business is not doing as well as before.
A group of smart people who study companies, called analysts, believe that the US government is unlikely to allow Nvidia to ship these chips to China. This has led them to assume that Nvidia will not make as much money in 2025 and 2026.
One such analyst at a big bank called Citi, Atif Malik, said: “We think the new rules will make it difficult for Nvidia to sell in China.” Because of this, Citi changed its estimate of how much Nvidia stock will be worth in a year. They used to say it would be $630, but now they say it will be $575. However, they still think it’s a good idea to buy Nvidia stock because they believe smart technology will become even more popular.
Although Nvidia’s value has fallen from its high point last year, they are still doing quite well. They are approximately 12% lower than their highest value. This happened after they told everyone that they made a lot of money in August. They don’t think this new US government rule will hurt their businesses too much this time. They say that people around the world still want to buy Nvidia products.
However, in the future things might not be so easy. Nvidia says they could have difficulty creating new products, helping people who already have their products, and shipping them to places affected by the new rule. They may even have to move some parts of their business out of certain countries.
Nvidia also mentioned that even if they apply for special permission to ship these chips, they can’t be sure of getting it. And even if they did, they’re not sure if the US government will say yes quickly. So, they’re in a bit of a complicated situation right now.
Also read: New US Commerce Department rules aim to keep advanced computer chips away from China