Trump Plan to Undo Chip Curbs Is Win for Nvidia—But Not for Long, Analysts Warn

Key Takeaways

• President Donald Trump reportedly plans to repeal Biden-era chip-export curbs that were set to take effect later this month, offering a reprieve for Nvidia and other chipmakers.
• However, the relief could prove temporary, Citi and Deutsche Bank analysts warned, with Trump looking to replace the rules with new ones that could be stricter than Biden's.
• Jefferies said Trump's new chip curbs could take a long time to implement, expecting his administration to follow a government-to-government approach and leverage them in tariff negotiations.

The Trump administration’s reported plans to repeal Biden-era chip-export curbs that were set to take effect later this month would be a win for Nvidia (NVDA) and other chipmakers. But their relief could prove temporary, analysts warned. 

A spokesperson for the Commerce Department's Bureau of Industry and Security told Investopedia Wednesday that the administration intends to replace the rule with other restrictions—which Citi and Deutsche Bank analysts warned could be stricter than Biden's.

"While this news is a welcome relief to AI related semi names in the near-term, as the complexity of the AI Diffusion rule is removed, we still believe the U.S. government's overriding goal to restrict access to AI semis remains unchanged," Deutsche Bank analysts wrote Wednesday. 

In a note to clients Thursday, Jefferies analysts said they expect the Trump administration to take a government-to-government approach to new rules, as it has said it will do with tariffs, and use AI chip-export limits as leverage in ongoing tariff negotiations, potentially extending the time needed to roll out new rules.

Wait for Details of Plan Comes With Opportunity, Uncertainty

"We won't know the details for some time," Jefferies said, leaving Nvidia and other chipmakers a longer window to sell products that haven't been restricted yet, but also with a great deal of uncertainty. Nvidia did not immediately respond to a request for comment.

The news comes just weeks after Nvidia said it expects to take a $5.5 billion hit to its fiscal first-quarter results, due for release May 28, after the U.S. implemented a licensing requirement for Nvidia to sell its H20 chips to China.

The Biden AI diffusion rule, if allowed to take effect and enforced, would potentially lower Nvidia's earnings by another 11% to 14% in a worst-case scenario, according to Bank of America Securities estimates. 

Shares of Nvidia were up nearly 1% in recent trading Thursday but have lost close to 12% of their value since the start of the year as worries about the trajectory of AI spending and export restrictions weighed on the stock.

"In the interim expect volatility to reign supreme," Deutsche Bank said. 

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