Tech stocks continued to fall on Thursday as analysts warned that tighter export rules on China could have a wider impact on the sector. Chipmaker Nvidia (NVDA) dropped another 3% at the time of writing following a 7% decline the day before. This came after the company said it expects a $5.5 billion hit due to new restrictions on its H20 AI chips to China. Analysts say this adds to the growing worries that the tech industry could suffer long-term damage from the U.S.-China trade conflict.
Indeed, Bank of America analysts said the rules won’t just hurt Nvidia, but they could also affect other AI-focused companies like AMD (AMD), Broadcom (AVGO), Micron (MU), Arm (ARM), Marvell (MRVL), Coherent (COHR), and Lumentum (LITE). They believe Nvidia’s big write-down implies that there is a low chance the company will get licenses to bypass the new restrictions. Morgan Stanley analysts agreed and said even tougher AI export rules are coming in May that could block sales to even more countries.
At the same time, Wedbush analysts added that with all the uncertainty, tech companies probably will not give earnings guidance in the next few weeks. In addition, in a note to clients, they said, “While the Nvidia news is concerning, it’s not surprising.” Wedbush went on to compare the current U.S.-China tensions to a “Twilight Zone” and expects both countries to keep raising tariffs and restrictions before eventually starting serious negotiations. In the meantime, tech stocks could stay under pressure.
Which Chip Stock Is the Better Buy?
Turning to Wall Street, out of the stocks mentioned above, analysts think that MRVL stock has the most room to run. In fact, MRVL’s average price target of $110.48 per share implies more than 115% upside potential. On the other hand, analysts expect the least from AVGO stock, as its average price target of $246.55 equates to a gain of 4.3%.
