Nvidia’s AI heft to power results again, Wall St seeks China clarity

NEW YORK (Reuters): Artificial intelligence chip leader Nvidia (NVDA.O) will likely deliver yet another blockbuster revenue forecast on Tuesday. But the real focus will be on whether widening U.S. curbs on sales of its high-end chips to China could hamper that run.

The results will also be a major test for the AI-powered rally that has helped drive up the U.S. stock market this year, with the Philadelphia semiconductor index (.SOX) up nearly 50% in 2023.

“There is an underlying assumption that Nvidia has total market dominance … so anything that affects that perception, whether it be because of the business performance or because of risks to certain markets, that is going to temper enthusiasm,” Capital.com analyst Kyle Rodda said.

The Biden administration last month banned China sales of the H800 and A800 chips that Nvidia had created after previous curbs on exports to the country. China is the company’s third-largest market and accounts for more than one-fifth of its revenue.

Nvidia has said it does not expect any impact from the curbs in the near term. But its stock hit a near five-month low in October after a report by the Wall Street Journal said that up to $5 billion in Chinese orders were in jeopardy.

After a meteoric rally earlier this year that made it the first trillion-dollar chip firm, Nvidia’s stock declined more than 12% between August and October, signaling investors were getting harder to impress as the China concerns mount.