TLDR
- Nvidia shares dropped 3.4% Tuesday amid broader AI chip sector weakness and Chinese market uncertainty
- AMD CEO Lisa Su forecasts just $100 million Q1 China revenue, calling the situation “very dynamic”
- Nvidia’s potential $30 billion H200 chip deal with Chinese companies awaits final U.S. approval
- AMD reported strong Q4 results beating estimates but stock fell 6.98% in pre-market trading
- Data center revenue of $5.4 billion exceeded forecasts while memory shortage threatens PC demand
Nvidia took losses Tuesday as the AI chip sector struggled with Chinese market uncertainty. Shares dropped 2.8% during regular trading.
After-hours activity pushed losses to 3.4% total. The decline came despite Nvidia’s leadership position in AI chips.
Recent weeks have seen AI stocks act as market drags. New AI tools have pressured software and legal-services companies.
But chip manufacturers aren’t seeing offsetting gains. Traders appear to be waiting for clear positive signals before buying.
China Sales Create Sector Headwind
Chinese chip sales could provide the boost investors want. Right now, though, the outlook remains murky.
AMD’s earnings call Tuesday highlighted the uncertainty. CEO Lisa Su confirmed the company generated some Q4 China revenue.
For Q1, AMD expects only $100 million from the region. Su told analysts the company isn’t “forecasting any additional revenue from China just because it’s a very dynamic situation.”
That caution extends to Nvidia’s situation. The company’s China deals need final government approval.
Financial Times reported Wednesday that approval remains pending following national security reviews. No clearance means no shipments.
Earlier reports indicated Beijing authorized firms including Alibaba to prepare H200 chip orders. Chinese buyers want approximately 1.5 million units.
KeyBanc analyst John Vinh estimates the deal at $30 billion in revenue. Nvidia has agreed to give Washington a 25% cut of sales.
Strong AMD Results Meet Weak Response
AMD crushed fourth quarter expectations Tuesday. The company delivered $1.53 earnings per share on $10.3 billion revenue.
Consensus estimates called for $1.32 EPS and $9.6 billion revenue. First quarter guidance also topped projections.
The market reaction was harsh. Pre-market trading showed AMD down almost 7%.
Data center performance remained robust. Revenue reached $5.4 billion compared to $4.97 billion estimates.
Client business revenue totaled $3.1 billion versus $2.9 billion forecasts. Gaming revenue missed slightly at $843 million against $855 million expectations.
Global memory shortages present new challenges. PC manufacturers may need to raise prices, potentially destroying demand.
AMD launched new products at CES 2026 in January. The Helios rack-scale server directly competes with Nvidia’s systems.
The MI500 GPU line promises massive performance improvements. Su projects the AI data center market will reach $1 trillion by 2030.
Major customers are becoming competitors. Google, Amazon, and Microsoft continue developing proprietary chips for their facilities.
Past year performance shows strong gains for both companies. AMD climbed 112% while Nvidia advanced 54%.
AMD guided first quarter revenue between $9.5 billion and $10.1 billion, above the $9.4 billion Street estimate.
