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Could sanctions stump AMD stock growth?

Could sanctions stump AMD stock growth?
Elmaz Sabovic

Before its recent surge, Advanced Micro Devices (NASDAQ: AMD) stock remained relatively stable within a sideways parallel channel for an extended period

However, AMD stock surged by over 16% in the last five trading sessions, pushing its price above the $200 mark for the first time in the company’s history.

AMD 7-day stock price chart. Source: Finbold
AMD 7-day stock price chart. Source: Finbold

But now, amidst the US sanctions on exporting microchips to China, AMD has been caught in between, as one of its AI chips was deemed too strong to be exported.

US sanctions preventing AMD from exporting to China

Advanced Micro Devices encountered a hurdle from the US government while attempting to sell an artificial intelligence chip tailored to the Chinese market. This setback is part of Washington’s efforts to tighten controls on the export of advanced technologies to China, according to a report from Bloomberg on March 5.

AMD had sought approval from the Commerce Department to sell the AI processor to Chinese customers. The chip, designed to meet US export restrictions, offers lower performance than AMD’s offerings outside of China.

However, US officials informed AMD that the chip still exceeded acceptable power levels, mandating the company to obtain a license from the Commerce Department’s Bureau of Industry and Security for its sale. It remains to be seen whether AMD will proceed with the license application.

The news of this rejection possibly influenced AMD shares, which fell by -1.8% in pre-market trading on March 5.

Nvidia is already suffering the consequences

In its latest quarterly report, Nvidia (NASDAQ: NVDA) disclosed that China accounted for a ‘mid-single digit percentage’ of its data center revenue, with a similar forecast for Q1 of 2025. 

Nvidia annual revenue by region. Source: Breno Niero
Nvidia annual revenue by region. Source: Breno Niero

NVDA CEO Jensen Huang acknowledged a notable decrease in China’s contribution this quarter, attributing it to a company-wide halt in sales prompted by stricter US sanctions on AI technology exports introduced in October 2023. 

Huang stated that Nvidia ceased shipments to China in response and has since developed products it believes meet the criteria for an export license.

If Nvidia’s sales are a benchmark for AMD, the outlook might not seem promising. However, the impact likely won’t be as significant considering the growing demand in other regions and domestically in the US, fueled by AI excitement.

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