Nvidia shares fell early Wednesday as the chipmaker remained vulnerable to profit-taking and worries about export controls.
Nvidia shares were down 0.6% to $121.96 in premarket trading after closing down 1.3% on Tuesday.
Nvidia shares have risen 148% this year through Tuesday’s close.
S&P 500
Index and 20% increase
Nasdaq Composite Index
However, shares have fallen from recent intraday highs of more than $140.
“We believe the current backlash against NVIDIA is centered around real end-market demand for AI GPUs. [graphics-processing units]”Demand for AI chips will likely weaken, particularly due to further restrictions on shipments to China and delays in issuing licenses to AI chip makers shipping to the Middle East,” Mizuho Securities analyst Vijay Rakesh wrote in a research note.
However, Rakesh said NVIDIA remains his top pick for July and he maintains his outperform rating on the stock and $127.50 target price.
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Demand for Nvidia chips remains strong in China, despite U.S. restrictions on exports of high-end hardware.
According to the Wall Street Journal, more than 70 Chinese distributors are openly advertising what they claim to be exclusive Nvidia chips online, supplying dozens of high-performance processors each month and some even selling entire servers worth more than $300,000.
The flow of semiconductors into China is relatively small — estimated at about 12,500 units per year, according to an analysis by the Center for a New American Security — so concerns that Nvidia might become subject to tougher U.S. government regulation should be limited.
Among other chipmakers, Advanced Micro Devices Inc. rose 0.4% and Intel Corp. rose 0.3% in premarket trading. Server maker Supermicro Computer Corp.
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It increased by 0.2%.
Email Adam Clark at adam.clark@barrons.com.
