Now I’m Worried About Nvidia Stock (NVDA)

By Douglas A. McIntyre Published Jun 14, 9:27AM EDT

Key Points

Nvidia (NASDAQ: NVDA) faces an existential risk from U.S. export restrictions, as banning high-end chip sales to China could accelerate China’s development of competing semiconductor technologies.
A Chinese domestic competitor, once established, would not only block Nvidia from China but could eventually threaten its global market share by exporting alternative AI chips.
While Nvidia remains the gold standard in AI chips globally, the geopolitical risk around trade policy—not competition from AMD or others—now poses the biggest strategic threat to its valuation.

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Now I’m Worried About Nvidia Stock (NVDA) — © 24/7 Wall St24/7 Wall St

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Transcript:

[00:00:04] Doug McIntyre: Lee, I’m worried about NVIDIA and that’s because I think that. The, the argument that they’re making about why they should be allowed to sell chips into China is right. If we don’t sell them our chips, they will make their own chips. Once they make their own chips, they become a competitor to NVIDIA.

[00:00:26] Doug McIntyre: Would you rather have China buy our chips? Or would you rather have China build competing chips, which means we’ll never sell chips there, and means that China can eventually sell those chips to anybody, which means that NVIDIA potentially has a global competitor. So I think the argument that NVIDIA should be able to sell chips, its most powerful chips into China, it is a mistake that the federal government is saying you can’t do it.

[00:00:52] Lee Jackson: Yeah, I, I tend to agree simply because, and I realize why, because it’s our ongoing, you know, wrestling the 800 foot trade alligator with these guys and, you know, and she’s moving slow on it. But yeah, I really do think that, that even if they had to put in some stipulations on the sales, or whatever that the government could do, yeah, I think it’s bad because.

[00:01:17] Lee Jackson: And I don’t know if there’ll be a competing Chinese chip company with that kind of product soon, but there eventually you can count on, there’ll be one. ’cause you know how they are, Doug, if they can’t figure out how to do it, they just steal the technology.

[00:01:33] Doug McIntyre: Well, look, I don’t want to, you know, be too hard on the Chinese, but they have a history of taking things like Windows or Microsoft.

[00:01:42] Doug McIntyre: Yep. And basically, reverse engineering it and suddenly, I mean, Steve Ballmer said this is at least 20 years ago, that if every version of Windows that was in China was paid for, that China earnings for Microsoft (NASDAQ: MSFT | MSFT Price Prediction) would be nine times what they year.

[00:02:06] Lee Jackson: Yeah, I remember that. And that was 20 years.

[00:02:09] Doug McIntyre: Yeah. If I’m an NVIDIA shareholder or I’m looking at buying it, I’m not really worried about their growth outside China.

[00:02:18] Doug McIntyre: Listen, is it gonna slow down some? Yes, it has to.

[00:02:21] Lee Jackson: Well, it always does. Yeah.

[00:02:23] Doug McIntyre: But is it going to be the gold standard? I think that’s gonna be true for years, if not more. I don’t see a MD or somebody like sneaking up behind them and suddenly they’re not in first place. So to me, the, the existential threat to the current NVIDIA share price is the fact that we’re not letting China buy NVIDIA chips.

[00:02:48] Lee Jackson: Yeah, yeah. No, I, I agree. And to be honest. Again, like you said, they can reverse engineer stuff. They could probably, if they, you know, if they take one apart and dig into it long enough, they’ll be able to copy what they can come up with. But yeah, the thing that’s so frustrating about all this is, uh, about the whole trade hu of blue is that everything the president has said basically is exactly the truth.

[00:03:12] Lee Jackson: We’ve had unfair trade penalties placed against us for decades, literally 50, 60 years, and nobody did a damn thing about it. And so we need to do something. But yeah, I mean, there’s a point when you’ve gotta say, okay, what companies. Can are really gonna get hurt the hardest if their products are restricted.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.