Nvidia Gets Put In Place

It is uncommon when private tech companies lash out at the government like they are some kind of whipping boy.

Silicon Valley is so successful - they don’t need to target government policy.

Anger comes in many forms but openly criticizing the government could get you in some hot water in places like China.

Just look at Alibaba founder Jack Ma who was taken out to pasture by the Chinese communist party.

Criticism is usually reserved in Silicon Valley because subsidies and relationships are preserved to fight another day.

Nvidia finally felt it was time to let loose on the disastrous Biden Administration as the chip company gets dragged into politics just like almost everything else in American society.

Nvidia viciously criticized new chip export restrictions that are expected to be announced soon, saying the White House was trying to undercut the incoming Trump administration by imposing last-minute rules.

It’s is arguable that many strategic moves the current administration executes are to stymy the next administration.

Private tech companies are just collateral damage and Nvidia is finding that out the hard way.

The looming changes would cap the sale of US artificial intelligence chips on both a country and company basis — a move that would more tightly limit exports to most of the world.

The extreme ‘country cap’ policy will affect mainstream computers in countries around the world, doing nothing to promote national security but rather pushing the world to alternative technologies.

Nvidia has been the biggest beneficiary of a surge in AI spending over the past two years, helping turn the once-niche company into the world’s most valuable chipmaker. Its shares nearly tripled last year, following a 239% gain in 2023.

Speaking at the CES conference in Las Vegas this week, Huang said he expected Trump to bring less regulation.

I can now say with more certainty that tech stocks appear to be in a bubble and it doesn’t help that an obstructionist government is putting in limits to how much they can sell abroad.

Globalization has accelerated to some extreme that many people and businesses are still having a tough time wrapping their minds around what happened.

Putting a cap on the number of AI chips Nvidia can export will just gift the advantage to another competitor.

The Chinese have never played by the rules with their state subsidies and stealing of intellectual property.

These are several hallmarks of their national heavyweights.

Hamstringing Nvidia is the worst thing the US government could do minus shutting them down completely.

In general, the amount of bureaucratic nonsense, dysfunction, red tape, and needless saber-rattling is starting to hit the bottom line of Silicon Valley.

This could all bring forward a selloff from this tech bubble we are currently in.

Granted, I will acknowledge that the federal government isn’t only targeting the tech sector and the inefficiencies run across a wide swath of the U.S. economy system.

But that doesn’t make it better.

We are priced to the point where AI is guaranteed to become our savior and I would say to hold on because we are nowhere near certainty and there are very few use cases of all this AI data center investment.

We are trading at highs and the government going after Silicon Valley will hasten a sharp selloff in expensive tech stocks.

Don’t play with fire or you’ll be burned.