Will Biden’s new restrictions kill Nvidia stock?

Despite reaching new highs by January 6 – and experiencing an exceptionally well-timed insider sale for the effort – there has been something of a storm brewing for Nvidia (NASDAQ: NVDA) stock in early 2025.

On Monday, January 13, NVDA shares threatened to plunge below $130 as uncertainty mounted surrounding the Biden administration’s latest plans to impose new restrictions on the export of advanced artificial intelligence (AI) chips.

Though the unveiling of the details about the new rules did not prevent an extended session recovery, they might, in the long run, prove especially damaging for the semiconductor giant.

Nvidia fires back against the Biden chip export plan

Specifically, the Biden administration is seeking to safeguard America’s national security and ensure its continued technological leadership by limiting international access to highly advanced components.

Even before the details became known, Nvidia voiced its vehement opposition to the plan, arguing it would neither ensure security nor safeguard technological leadership but that it would instead both be damaging to the chipmaker and to the standing of the U.S.

Interestingly, the semiconductor giant pointed out that many of the components that would be restricted are already widely available through gaming and other consumer chips, raising concerns about the Biden administration’s actual strategy but also about the nature of the hardware Nvidia is commercially selling.

Why Biden’s new chip export restriction could lead to NVDA stock bloodbath

The chipmaker’s reaction, once its business is examined, appears well-founded. Indeed, more than half of the company revenue comes from customers outside the U.S., and as much as 17% is raised in the Chinese market.

Considering that only 18 countries would not see their access restricted – though additional non-adversarial nations would be permitted to request access – Nvidia’s revenue could take a substantial hit.

Such a prospect is particularly dire, given that the chipmaker’s valuation – standing above $3.2 trillion at press time – is already more than 50 times higher than the firm’s 12-month revenue.

Furthermore, the new regulatory environment could exacerbate some of Nvidia’s internal issues. For example, by late 2024, it became known that some version of the Blackwell infrastructure – the flagship product and a major driver of optimism – had a design flaw that severely reduced yields.

Though the early issues are reportedly addressed, new ones emerged in early 2025 as January 13 reports indicate that the semiconductor giant’s biggest customers are delaying their orders due to ‘glitchy AI chip racks.’

Opposition to Biden’s chip export plan extends beyond Nvidia

The Biden administration’s new chip export plan has caused a stir beyond Nvidia. 

Though few were surprised that the Russian Federation and the People’s Republic of China – arguably the main target as most reports indicated the restrictions are designed to curb the People’s Liberation Army’s integration of AI – the European Union was displeased to discover only about half of its members would enjoy unrestricted access.

Specifically, Belgium, the Netherlands, Denmark, Sweden, Finland, France, Germany, Ireland, Italy, and Spain are to continue enjoying unrestricted access. 

Meanwhile, 17 EU countries could, presumably, request unrestricted access but are not counted among America’s closest ‘friends:’ Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, and Slovenia.

Though the European Union has, as a whole, expressed its displeasure with the decision, arguing that doing business with the union should be viewed as beneficial and an opportunity for the United States and not as a national security threat, the exclusion of Poland might be seen as especially strange.

The Eastern European country, along with positioning itself as a particularly close ally of the U.S., is one of the few nations in NATO to actually allocate more than the agreed-upon 2% of its GDP to the defense budget and is seeking to significantly modernize its army to become something of an eastern bulwark for the union.

Finally, outside the EU, Nvidia can continue doing business with no additional rules with the United Kingdom, Norway, Canada, Australia, New Zealand, Japan, South Korea, and Taiwan.

Featured image via Shutterstock