Nvidia (NVDA, Financial) CEO Jensen Huang urged a revamp of U.S. export rules on AI chips, saying Wednesday that the current “AI Diffusion Rule” must evolve to match today's global landscape and accelerate the spread of American technology worldwide.
Speaking to reporters in Washington, D.C., Huang called for “policies and encouragement from the administration” to support broader access to U.S. AI accelerators, arguing that the world has “changed fundamentally” since the rule's January rollout under the Biden White House.
The AI Diffusion Rule, designed to curb advanced chip exports over national security concerns, imposes tiered limits on how many high-end GPUs each foreign entity can purchase. Yet Huang warned that rivals such as Huawei are quickly closing the gap in AI capabilities, underscoring the need for more flexible diffusion.
President Trump's team is reportedly renegotiating parts of the legislation, weighing how many devices each country tier can receive and which advanced models fall under export curbs. Nvidia shares slid 2.5% mid‐day as investors digested the potential impact of looser rules on both sales growth and competitive dynamics.
Goldman Sachs analysts note that any easing could unlock new enterprise and cloud‐service contracts in Asia and Europe, bolstering NVDA's already robust data‐center revenue, which surged 47% last quarter and now accounts for over half the company's top line.
Investors should care because changes to export policy could materially expand Nvidia's addressable market, especially in fast‐growing regions like China and India, while recalibrating geopolitical risk around U.S. chip dominance.
With Nvidia set to report Q2 results after the close on May 22—where analysts expect $3.22 in EPS on $68.43 billion in revenue—markets will be watching for any management commentary on export controls, global capacity constraints and how new rules might reshape Nvidia's growth trajectory and competitive moat.
Nvidia's stock (blue) has tumbled back toward its long‐term GF Value line (black), currently pegged at $181.38, after a blistering AI‐driven surge into the $400s. Since peaking in early 2025, shares have retraced roughly 30%, sliding into the “possible value trap” zone where the valuation no longer offers a clear margin of safety.
The chart's shaded bands show that even a modest 10% upside would require a rebound above $200, while the more optimistic 30% path ascends toward $260 by 2027—well below the red forecast bands. Meanwhile, the green band suggests a -30% downside threshold near $125, underscoring the risks if AI capex cools.
With GF's dashed projection trending up to roughly $310 by 2027, Nvidia still commands a premium multiple, but recent underperformance signals that investors may need to think twice before betting on another meteoric rise.
