- Nvidia lost $5.5 billion after the United States banned sales of its H20 chips to China.
- Jim Cramer referred to NVIDIA as a meme stock and recommended that his audience reduce exposure to it.
- Nvidia could forfeit China market to local rivals like Huawei, analysts warn
Nvidia has been under pressure since the U.S. government imposed new export restrictions regarding its H20 chips. This year, the semiconductor leader is set for a $5.5bn earnings charge in the current quarter due to the blocked shipments in China.
These chips were produced to meet earlier export standards, but the Department of Commerce has declared that a license is needed for them, labeling them as a threat to national security. The chipmaker revealed recently in its filing to the US Securities Commission that it received two letters from the US government on the 9th and 14th of April regarding new licensing conditions.
The company’s shares fell by 6% after the NASDAQ close on April 16, trading lower in pre-car market trading. For the year to date, the stock has lost over 21% of its value. According to analysts at Bernstein, the H20 chip contributed to $5 billion of Nvidia’s $17 billion revenue in the last year in China.
However, Nvidia did not inform some of its Chinese clients, such as Alibaba and Tencent, of the new restrictions before implementing them. Reuters also reported that these companies planned to receive the delivery by the end of 2025.
Cramer Sounds the Alarm, Questions Market Behavior
Jim Cramer, the host of CNBC’s Mad Money, joined in on the selloff and referred to Nvidia as a meme stock on 16th April post on X. In a follow-up to his show, Cramer said he began reducing the position, suggesting that it was hard to hold the stock “like you used to.”
Cramer has been both bullish and bearish on Nvidia in the last couple of weeks. He concedes long-term bullishness has not disappeared, but he is shifting more bearish on shorter-term trading manipulation of NVDA stock. He stated that bullish trends and short-sellers manipulated the market through their use of zero-day options, which created very high stock flipping.
His remark has amplified concerns among retail and institutional investors already socialized to the mounting geopolitical risks and shifts to a less forgiving US attitude toward Chinese technological advancement.
China Market Under Threat as Local Rivals Gain Ground
Although the H20 chip was developed as a countermeasure to previous export bans, it may now be lagging in China. Beijing has especially favored domestic appliance development, and energy efficiency rules may foster the adoption of local AI hardware such as Huawei.
Analysts claim that the firm may fall out of favor with regulators in this key market that accounted for 13% of the total revenue in the last fiscal year. This means the geographical dispersion and scope of the firm continue to pose risks as Washington sharpens its sanctions. Similar license conditions have previously existed in the case of AMD’s MI308 chips and other powerful semiconductors.
Nonetheless, there is evidence that Nvidia is increasingly establishing a presence in the United States’ infrastructure. Recently, the company declared a $500 billion investment plan with TSMC and Foxconn to develop domestic AI capacities. However, if export clarity remains lacking, analysts estimate that China’s revenue may fall significantly further.
