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U.S. is considering new restrictions on the export of A.I. chips to China, the Wall Street Journal reported on Wednesday.

Analyst reacts to the news

Shares of notable semiconductor players, including Nvidia Corp (Nasdaq: NVDA) and Advanced Micro Devices Inc (Nasdaq: AMD) are trending down following the news this morning.

The said restrictions could go live as soon as next month. Reacting to the report, Matt Maley – Managing Director of Miller Tabak said on Yahoo Finance Live:

This news is coming at a time when these stocks are overbought. It could be a reason for short-term traders to take some profits and long-term traders to wait for lower levels to add to their positions.

The new restrictions will also affect companies that offer cloud-computing solutions, as per the Wall Street Journal.  

Maley’s view on A.I. stocks

The news arrives less than a year after the U.S. government restricted sales of high-end chips to China.

In response, Nvidia built the A800 – a lower-spec chip for its clients in China. The new restrictions being considered, though, may even limit the export of that chip to China. Maley also said today:

 

Once we get into the H2 and we start to feel the real effects of the credit contraction, we could see some of these stocks fall back to Earth a bit. And that’s normal and healthy in these big runs.

Nvidia Corp brought in $7.1 billion in revenue from China and Hong Kong last year; AMD about $5.2 billion.

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