Trade tensions and Trump's tough talk about Taiwan are hurting Nvidia and other chip stocks
Tech and AI stocks declined on Wednesday, causing the Nasdaq $NDAQ and S&P 500 to drop sharply as investors reacted to potential new export controls under the Biden administration and comments on Taiwan by former President Donald Trump. The Dow Jones Industrial Average, which closed almost 750 points higher the day before, was flat on Wednesday.
In the afternoon, the Nasdaq lost 2.79% while the S&P 500 shed 1.32%. The Dow was up by 0.6% to 41,201.
The double-whammy to the AI stocks came late Tuesday, after Bloomberg reported that the Biden administration is considering severe trade restrictions if firms like Tokyo Electron and ASML $ASML Holding continue to provide China access to their advanced semiconductor technology. The so-called foreign direct product rule (FDPR), would represent a significant crackdown on the sharing of American technology with the country. The rule applies to chips with even the smallest sliver of American-made technology, and would impact U.S. and non-U.S. companies.
Hours earlier, the former president and Republican presidential nominee told Bloomberg Businessweek that he believes Taiwan should pay the U.S. for its defense.
“Taiwan doesn’t give us anything,” he said.
Trump also claimed that Taiwan has taken “about 100%” of America’s semiconductor business. Hsinchu, Taiwan-based TSMC $TSM is the world’s largest chipmaker, manufacturing an estimated 90% of the world’s most advanced chips that power everything from iPhones to artificial intelligence models.
Here’s where each major AI stock stood Wednesday afternoon:
As investors kept dumping AI stocks, tech stocks were down, too, on Wednesday. In the afternoon, Apple $AAPL, Meta $META, Amazon $AMZN, and Alphabet $GOOGL were down by 2.6%, 5%, 3%, and 1.6%, respectively.
— Rocio Fabbro contributed to this article.
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