Last week, the Cyberspace Administration of China banned big tech firms from buying Nvidia’s (NVDA) artificial intelligence chips. It told ByteDance and Alibaba (BABA) to stop testing and ordering the RTX Pro 6000D.
Nvidia offered the custom-made chip specifically for China. CEO Jensen Huang said, “We can only be in service of a market if a country wants us to be.” He expressed disappointment, adding that there are “larger agendas to work out between China and the United States.”
NVDA stock initially dipped to around $170 before recovering by the end of the week. The CEO is willing to wait for the Chinese government and the U.S. to resolve trade disputes.
China’s tech market is roaring ahead. Alibaba (BABA) looked like a e-commerce sales plunge in U.S. markets would hurt its prospects. Instead, the company is pivoting to AI. BABA stock bottomed at $79.43 earlier this year. It closed at $162.81 on Sept. 19. Baidu (BIDU) stock traded in the $80 – $92 range throughout the last year. In the last month, BIDU stock surged by 56%.
China’s economy will continue to worsen. The housing market crash, led by Evergrande, is a distinct problem. The downturn, hurting the Chinese consumer, does not have an impact on AI developments in the country.