The U.S. government is investigating if American semiconductor giant Nvidia (NVDA) may have helped China’s DeepSeek AI in creating powerful artificial intelligence (AI) chips. According to the New York Times, the U.S. House Select Committee on China initiated a probe to determine if Nvidia knowingly sold H20 AI chips to DeepSeek. The administration is also considering penalties to block DeepSeek from buying U.S. technology, while also wondering if it should ban Americans from using its models.
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Nvidia has got caught in the crosshairs of the intensified U.S.-China trade war. The company’s stock dropped another 7% yesterday, bringing its total year-to-date decline to 22.2%. Shares of other major chip makers, including AMD (AMD) and ASML Holdings (ASML), also plunged, collectively wiping out over $180 billion in market value yesterday.
Nvidia Follows Export Laws to the Letter
Yesterday, the committee released a report stating that it sent a formal letter to Nvidia, asking clarifications about “sales to China and Southeast Asia to examine whether and how its chips ended up powering DeepSeek’s AI models—despite U.S. export restrictions.” The report also alleges that DeepSeek trained its models using about 60,000 of Nvidia’s AI chips, including 20,000 chips that are restricted under export controls. This has raised an alarm about the possibility of DeepSeek accessing Nvidia’s chips through unauthorized or indirect channels.
In response, Nvidia stated that it follows all required export laws on where it can sell its technology. “The U.S. government instructs American businesses on what they can sell and where — we follow the government’s directions to the letter,” a Nvidia representative said yesterday. The statement also highlighted that Nvidia’s products and services aim to secure national security at all times, create thousands of jobs, promote U.S.’ tech leadership, bring in billions of dollars in tax revenues, and help reduce America’s massive trade deficit.
The U.S. Goes All-In to Curb China’s AI Dominance
The Chinese AI startup rattled global markets in January, when it launched its “lower cost” and highly efficient R1 reasoning model. Since then, both the U.S. government and American tech players have become wary of China gaining a competitive edge in the AI domain. The U.S. is determined to maintain its supremacy in the market and is hence figuring “if” Nvidia played any role in aiding DeepSeek’s AI success.
On April 9, the Trump government imposed fresh restrictions on the sale of Nvidia’s H20 AI chips to China. Under the updated rules, Nvidia must obtain export license for selling its H20 processors to China and other countries. Following the new rule, Nvidia disclosed yesterday that it would take a $5.5 billion hit in its Q1FY26 earnings from H20 chip “inventory, purchase commitments, and related reserves.”
Is it Safe to Buy Nvidia Stock?
Despite the current chaos, analysts remain highly bullish about Nvidia’s long-term potential. On TipRanks, NVDA stock commands a Strong Buy consensus rating based on 37 Buys and four Hold ratings. Also, the average Nvidia price target of $171.46 implies 64.1% upside potential from current levels.
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