Strategist on Nvidia chips: AI coming to a halt is 'fiction'

Nvidia (NVDA) is reportedly developing a new Blackwell AI chip for the Chinese market, according to Reuters. The company's shares are trading higher Monday afternoon following this report.

Moor Insights & Strategy founder, CEO, and chief strategist Patrick Moorhead joins Market Domination Overtime to discuss his outlook on the semiconductor giant.

Moorhead states he is "not surprised" by this move, noting that "it makes sense" for Nvidia. He explains that since full-spec Nvidia chips are "easy to pull in" and import into China, the Department of Commerce is likely seeking a "not full-spec" alternative that the Chinese military couldn't use.

Addressing the recent rebound of semiconductor stocks after political pressures, Moorhead observes that "regardless of what administration" takes office as a result of the 2024 election, "there is going to be a reaction." However, with China being a leading exporter of chips to the US, he believes investors are realizing that companies like Nvidia will see increased sales.

"This whole notion of AI coming to a screeching halt anytime soon is fiction," he tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Angel Smith

Video Transcript

Found a rare rough stretch for chip giant NVIDIA that stock check that out back in the green today, it's following a report that the company will make a new A I processor for the Chinese market for more on how this could impact the industry moving forward.

Let's welcome in Patrick Moorhead strategy founder, Ceo and chief strategist and more insights.

Uh Patrick always great to, so you uh this, this report is coming to us from, from Reuters, Patrick which is NVIDIA is working on a version of its new flagship A I chips for the China market that would be compatible with current US export controls.

Again, this is this is Reuters uh signing sources, Patrick just should get your take on that news, Patrick, what it means for NVIDIA and investors.

Yeah.

So first off, I'm not surprised at all the US Department of Congress uh put out a decree back in October of last year that uh put together uh a matrix that listed the performance in terms of A I tops and the density of that chip.

Uh in regards to if you need to ask the Department of Commerce for permission to do something and there was a red, yellow, uh green that, that came out of it.

So I'm not surprised at all.

And I think that it makes sense.

I think the, the Department of Commerce knows that it's not impossible for people to import uh full spec uh NVIDIA data center gear in, into China because essentially they're, they're the pack of a, they're the size of a carton of cigarettes.

So, so very uh easy to pull in.

So, hey, let's bring in something that, that's not full spec uh that, let's say the uh Chinese military could use uh hypothetically against us and our allies, Patrick.

Um It seems like that the market is kind of shook off, shaken off the concerns around potential new regulations that were among other things hitting chip stocks and broader tech last week.

And today we're starting dr be to NVIDIA earnings all over again.

It feels like we've got some positive notes out today that are out with, you know, again, very lofty estimates for the company's revenue growth.

Do you think that's kind of where the narrative goes from here?

So I, I think it, I think the overall investment community shook off last week because if, if you're an investor, uh how do you put a percentage against uh either uh if, if Trump wins or I guess now if, if Harris would win, what are the puts and takes behind that?

I think when people dig in and analyze it.

They get away from the emotion.

They, they realize that it is a tit for tat knowing that regardless of what administration comes in, there is going to be a reaction.

The thing that people forget is that China uh creates uh more chips than can be controlled.

So China could just say we're going to cut off chips for you United States.

And as we've seen in recent reports, uh our largest military contractors import chips from China.

So I think where everybody else is now, they've had the weekend to cool off.

They look at the history of this tit for tat and now they are making decisions on something that they can put the odds on.

And that's a potential increase in sales uh from NVIDIA.

And also the realization that because there's so much downstream FOMO for people who use NVIDIA or a MD GP us that this whole notion of A I come to coming to a screeching halt anytime soon is fiction.