Nvidia Corp (NASDAQ:NVDA, ETR:NVD) shares were down about 6.2% on Wednesday afternoon, extending recent losses as investors reacted to concerns over new energy efficiency regulations in China that could impact the company's artificial intelligence chip sales.
“So far in March, the company has accumulated a loss of more than 8%,” said Antonio Di Giacomo, financial markets analyst for LATAM at XS.
Di Giacomo attributed the decline to fears that China’s push to reduce energy consumption in high-performance computing could restrict Nvidia’s access to one of its most lucrative markets. “China is a key market for Nvidia, as its technology is widely used in AI applications, data centers, and supercomputing,” he noted.
Broader market volatility has also weighed on semiconductor stocks, with investors adopting a more cautious stance. “Investors have taken a more cautious stance amid recent fluctuations in the semiconductor sector, leading to massive sell-offs of shares in various companies,” Di Giacomo said.
At the same time, competition in AI chips is increasing, with rivals like AMD and Chinese manufacturers developing alternatives. “Companies like AMD and Chinese manufacturers have begun developing alternatives that could reduce Nvidia's market share in the coming years, further pressuring its stock valuation,” Di Giacomo added.
Despite these challenges, analysts still view Nvidia as a leader in AI and accelerated computing. “The company’s ability to adapt to these challenges will determine its stability and growth in the coming years,” Di Giacomo said.