Outgoing President Joe Biden has announced new rules that will limit the export of artificial intelligence (AI) chips. The Biden administration is doing so to maintain the U.S.’s dominance in the AI race while also cutting off the potential of its rivals. However, the U.S.’s closest allies will continue to benefit from AI chip exports.
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Under these new rules, Nvidia (NVDA) and Advanced Micro Devices (AMD) would be restricted from selling their advanced graphics processing units (GPUs) to customers in China, Russia, Iran, and North Korea. This would also force cloud computing companies, such as Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) to acquire special licenses to create data centers in countries with limited AI chip exports. With these licenses would come harsh restrictions on operations and strict reporting requirements.
What This Means for AI Stocks
AI stocks performed poorly on Monday following the AI chip announcement from the Biden administration. That’s unsurprising as further restrictions could hamper their operations and affect revenue and profits. Nvidia has expressed worry that additional regulation of its products could be a “sweeping overreach” considering its GPUs are already available in gaming PCs around the world.
All of this has investors concerned, with NVDA shares down 3.43%, AMD stock falling .18%, MSFT shares dropping 1.11%, AMZN stock slipping -.52%, and GOOGL shares sliding 1.39% as of this writing.
Are AI Stocks Still Worth Investing In?
Turning to Wall Street, analysts remain bullish on AI stocks despite the U.S. government’s new regulations. This has the stocks mentioned in this article maintaining Moderate Buy to Strong Buy ratings with potential upsides in the double digits. Investors can compare those in more detail below to determine which AI stocks are the best addition to their portfolio.
