Stocks sank Wednesday after computer chipmaker Nvidia announced it was recording a $5.5 billion charge to comply with a new Trump administration rule on tech-related exports.
Shares of Nvidia lost nearly 8%, causing the tech-heavy Nasdaq to fall more than 2%. The broad-based S&P 500 declined 1.3%. The Dow Jones Industrial Average was trading about 0.6% lower, or down about 250 points.
Major companies typically record charges for one-time expenses or an expected reduction in earnings. The charge announced by Nvidia relates to a new Trump administration rule that applies to its H20 chips. Those AI chips were designed specifically to comply with Biden-era regulations for selling tech products to China. CNBC reported the H20 line generated an estimated $12 billion to $15 billion in revenue in 2024.
In a filing late Tuesday, Nvidia said Trump officials are now requiring a new export license for the H20s to address « the risk that [the chips] may be used in, or diverted to, a supercomputer in China. » Nvidia said the administration officials indicated the rule would be in effect « for the indefinite future. »
The stock dive comes two days after Nvidia unveiled plans to manufacture some of its AI chips in the United States for the first time. The company said Monday that it’s developing facilities in Arizona and Texas, news the White House hailed as “the Trump Effect in action.”
Nvidia, now worth nearly $3 trillion thanks to widespread adoption of its chips by businesses racing to boost their artificial intelligence capabilities, has become a bellwether for the broader market.
But the chip giant’s shares have plunged some 23% so far this year as President Donald Trump’s trade war expands. The president has escalated tensions with China, which now faces 145% tariffs, and signaled over the weekend that new import taxes on foreign semiconductors are coming soon. Wednesday’s stock drop erased $200 billion from Nvidia’s market value.
The decline comes amid a broader market sell off in the weeks following Trump’s April 2 « Liberation Day » announcement of tariffs on dozens of individual countries, a sweeping slate of trade barriers he temporarily throttled back just days later.
AMD, one of Nvidia’a top competitors, also disclosed it would take a hit from updated U.S. export controls. The company said Monday that it expects to record $800 million worth of charges related to its MI308 GPU chip.
Shares of other chipmakers also dropped Wednesday, led by ASML, which fell about 5%. Micron, Broadcom and Marvell each slid by at least 2%. Chip manufacturers Applied Materials and Lam Research also traded sharply lower.
Since the April 2 tariff rollout, the S&P 500 and Nasdaq are still down around 6% apiece and the Dow remains about 5% lower.
J.J. McCorvey contributed.
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