Nvidia Drops 7% Following $5.5 Billion Charge and New U.S. Export Restrictions

San Jose, California | April 17, 2025 – Nvidia (NASDAQ: NVDA) shares fell sharply by approximately 7% in the latest trading session, after the company disclosed a $5.5 billion one-time charge tied to new U.S. export restrictions affecting the sale of its H20 AI chips to China. The announcement marks one of the clearest signals yet that Nvidia’s historic growth trajectory may be challenged by rising geopolitical headwinds.

New Export Restrictions on H20 Chips and Their Financial Impact

According to a filing submitted to the SEC, the U.S. government informed Nvidia that it would now require an export license for the company’s H20 processors when selling to China and several other nations — a restriction that will remain in place “for the foreseeable future.” The H20 chip series was specifically designed for the Chinese market, in compliance with previous U.S. regulations introduced in 2022 and tightened further in 2023.

The H20, based on Nvidia’s previous-generation Hopper architecture, generated between $12 billion and $15 billion in revenue in 2024. The new regulations are expected to significantly impact Nvidia’s revenue from China — its fourth-largest regional market after the U.S., Singapore, and Taiwan.

Competitive Pressures and Geopolitical Risks

In Nvidia’s latest earnings call in February, CEO Jensen Huang noted that revenue from China had declined to half of pre-export control levels. He also warned of intensifying competition from domestic Chinese firms, particularly Huawei. These dynamics, combined with regulatory uncertainty, have heightened concerns among investors.

Nvidia’s stock has also been affected by former President Donald Trump’s recent announcement of sweeping tariffs on key trade partners, including Taiwan and China — both vital links in Nvidia’s supply chain. While temporary exemptions were granted for some electronics products, U.S. economic leadership emphasized that these measures are short-term and subject to revision.

Institutional Investors Express Concerns: Global Growth Risks and Eroding Regulatory Confidence

Amid the stock’s sharp drop, institutional investors have voiced growing concern over Nvidia’s increasing exposure to regulatory and geopolitical risks. Hedge funds and large investment firms that had bet heavily on the continued growth of the AI sector are warning that the latest U.S. policy changes could constrain Nvidia’s international sales pipeline and impair long-term visibility. Beyond the immediate financial impact, the broader worry is a deterioration in confidence regarding the company’s operating environment — a critical factor for asset managers overseeing hundreds of billions in capital. Several institutions have signaled plans to reevaluate their exposure to the semiconductor sector as a whole, especially companies reliant on global supply chains or concentrated market dependencies such as China.

Market Reaction: Broad-Based Selloff in AI Chip Stocks

The market responded swiftly. Nvidia fell 7% in extended trading, while rivals Advanced Micro Devices (AMD) and Broadcom (AVGO) dropped 7% and 4% respectively. Investors are pricing in the possibility that export restrictions and trade tensions could ripple across the broader AI chip segment, weighing on growth and margins.

Looking Ahead: Heightened Uncertainty Before Q1 Earnings

Nvidia is scheduled to report fiscal Q1 earnings on May 28. Market participants will be closely watching for management’s revised outlook and strategic response to the newly imposed restrictions. Until then, Nvidia’s stock will likely remain under pressure as investors digest the broader implications — from growth deceleration and innovation hurdles to the rising risk of tech decoupling in a politically charged environment.