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Bullish? Nvidia in talks with U.S. to continue chip exports to China

Bullish? Nvidia in talks with U.S. to continue chip exports to China

Given its dominant position in the semiconductor industry and leading role in the production of advanced artificial intelligence (AI) chips, it is hardly surprising that Nvidia (NASDAQ: NVDA) has been offering a very strong performance throughout 2023 both on the business side and on the stock market.

The microchip maker is likely to soon receive another boon as it is currently negotiating with the U.S. government on the possibility of continuing to export advanced AI chips to China, per a Reuters report from Tuesday, December 12.

Nvidia is keen to cooperate with the Biden administration on the matter, according to U.S. Commerce Secretary Gina Raimondo, but would not be allowed to sell its most cutting-edge chips to China.

The U.S. government imposed new restrictions on exports to China in October. At the time, it was estimated that approximately $5 billion worth of Nvidia orders were in danger due to the new policy, though the semiconductor giant itself said that the change is unlikely to profoundly affect its business.

On the other side of the Pacific, Chinese companies have been proactive in their efforts to reduce the impact of the new limitation, and Finbold reported in November that Baidu (NASDAQ: BIDU) has already started ordering and receiving a large contingent of chips from Huawei – a domestic supplier and a major technology firm.

Nvidia set for continued strong performance

While the possibility of a more lenient framework that would enable Nvidia to continue having access to the Chinese market would definitely represent a major boon, the company is already well-positioned to continue its strong performance into 2024.

The chip-making giant’s third-quarter report unveiled impressive results, with the company logging a net income of nearly $10 billion – a particularly impressive result considering that the net income for the same period in 2022 stood at $680 million. Its earnings per share (EPS) also came in strong standing at $4.02.

Nvidia also flared up investor enthusiasm when it introduced its new highly advanced AI chip – the H200 – set to start shipping in the second quarter of 2024. Additionally, while the company had its fair share of bad news this year, including the new China export restrictions and French police raids in September, these hardly put a dent in the chip maker’s overall performance.

NVDA price analysis

Looking at the entirety of the year, Nvidia is poised to finish 2023 in a particularly strong state. Not only has its net income, revenue, and EPS grown significantly, but its shares are up 225.72% year-to-date (YTD). 

Additionally, the company has retained its dominant position in the chip market with a market share estimated to be higher than 80%.

NVDA YTD price chart. Source: Finbold

There has, however, been increased volatility in recent weeks. In the previous 30 days, Nvidia was down 4.10%. On the flip side, it was 2.56% in the green last week but closed at $466.27 on Monday, having declined 1.85% throughout the day.

It is, however, slightly up in the pre-market – 0.37% at the time of publication.

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