TLDR
- Nvidia stock declined 3.4% Tuesday as AI chip makers face pressure from uncertain Chinese market conditions
- AMD projects minimal $100 million Q1 China revenue, describing market as “very dynamic” with no additional forecasts
- Potential $30 billion Nvidia H200 chip sales to China remain stalled pending U.S. government security review
- AMD exceeded Q4 expectations with $1.53 EPS and $10.3 billion revenue but shares fell 6.98% pre-market
- Strong data center performance at $5.4 billion contrasts with memory shortage concerns affecting PC segments
Nvidia suffered losses Tuesday as questions around Chinese chip sales weighed on AI stocks. The company dropped 2.8% in regular hours.
Another 0.6% disappeared in after-hours action. This happened even though Nvidia dominates the AI chip space.
AI stocks are dragging lately instead of lifting markets. Software and legal-services firms are getting hit by emerging AI tools.
Chip makers haven’t caught a break from this dynamic. Market watchers are looking for new reasons to jump in.
Unclear Path for Chinese Revenue
China represents a huge opportunity for chip sales. The problem is nobody can predict when deals will close.
AMD’s Tuesday earnings call laid bare the confusion. CEO Lisa Su confirmed some Q4 Chinese revenue came through.
Looking ahead to Q1, AMD sees only $100 million from China. Su explained to analysts why they’re keeping forecasts conservative given the “very dynamic situation.”
This matters directly for Nvidia’s business. The company’s Chinese sales are stuck in approval limbo.
Washington is still reviewing the deals for national security concerns, according to Financial Times reporting. No approval means no sales.
Reports suggest Beijing greenlit companies like Alibaba to order H200 chips. Demand from Chinese buyers could reach 1.5 million units.
That translates to roughly $30 billion in potential revenue, per KeyBanc analyst John Vinh. The deal includes Nvidia passing 25% of proceeds to the U.S. government.
AMD Posts Strong Quarter Despite Stock Drop
AMD delivered a solid Q4 performance Tuesday. The company posted $1.53 earnings per share on $10.3 billion revenue.
Wall Street wanted $1.32 EPS and $9.6 billion revenue. AMD also guided Q1 higher than expected.
Traders weren’t impressed. The stock sank nearly 7% in pre-market hours.
Data center numbers looked healthy. That segment generated $5.4 billion against $4.97 billion estimates.
Client revenue hit $3.1 billion compared to the $2.9 billion target. Gaming fell slightly short at $843 million versus $855 million expected.
The global memory crunch poses risks ahead. Higher PC prices could reduce customer demand and hurt AMD’s consumer-facing divisions.
AMD unveiled fresh products at January’s CES event in Las Vegas. The Helios server system directly challenges Nvidia’s rack offerings.
New MI500 GPUs claim dramatic performance jumps over previous generations. Su forecasts the AI data center space reaching $1 trillion by 2030.
Tech giants are building their own silicon now. Google, Amazon, and Microsoft all develop custom chips for internal use.
Both AMD and Nvidia have climbed substantially over 12 months. AMD gained 112% while Nvidia rose 54%.
AMD’s Q1 guidance came in between $9.5 billion and $10.1 billion, topping the $9.4 billion consensus estimate.
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