Chip stocks tumbled Tuesday morning, with NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) dropping 5% after reaching a record-high close the previous session.
The PHLX Semiconductor Index (SOX) fell 4%, weighed down by declines in Arm Holdings (ARM), KLA Corp (NASDAQ:KLAC, ETR:KLA) (KLAC), Advanced Micro Devices (AMD), and ASML Holding (ASML).
The sell-off followed reports that the US government may cap the sale of advanced artificial intelligence chips from American companies to certain countries. According to Bloomberg, the Biden administration is considering new limits on export licenses for AI chips from companies like Nvidia and AMD, citing national security concerns.
The broader tech sector saw mixed results, with Microsoft, Meta Platforms, and Amazon losing ground, while Apple and Alphabet posted gains.
Nvidia had closed at a new all-time high on Monday, with a market valuation of $3.39 trillion, driven by optimism surrounding its next-generation Blackwell AI chip, which is now in full production after delays.