Nvidia Corporation (NVDA) shares are experiencing a rebound on Wednesday, recovering from a steep decline the previous day. The upswing follows a broader recovery within the chip sector, driven by renewed optimism surrounding AI-related demand.
Tuesday’s market downturn was largely attributed to weak guidance from ASML Holding Inc. (ASML), a leading supplier of chipmaking equipment. ASML lowered its full-year sales forecast citing weakened demand for non-AI chips, prompting a sell-off across the chip sector, including Nvidia.
However, the broader chip sector, including Nvidia, is bouncing back on Wednesday, fueled by an optimistic outlook for the AI segment. ASML’s CEO, Christopher Fouquet, emphasized during a conference call that the company remains “quite optimistic” about the long-term growth in the AI market, despite the slump in non-AI chip demand, primarily attributed to the automotive and consumer electronics industries.
The recent volatility in Nvidia’s stock price has also been influenced by ongoing U.S. policy discussions regarding AI chip exports. The Biden administration is considering new export restrictions aimed at limiting the sale of advanced AI chips to countries deemed potential national security threats. While China is already subject to these restrictions, there are discussions about expanding the controls to other nations, including those in the Persian Gulf, where AI infrastructure development is accelerating.
Despite these uncertainties, the overall sentiment surrounding Nvidia remains positive, with investors placing significant bets on the company’s leading position in the rapidly evolving AI landscape. The rebound in Nvidia’s stock price is a testament to the continued optimism surrounding the long-term potential of AI, outweighing concerns about near-term headwinds in the broader chip market.