Why NVDA, AMD Shares Are Plunging Today

Nvidia Corporation NVDA shares are moving sharply to the downside in premarket trading on Thursday.

The weakness follows a late Wednesday filing by the company that revealed that the U.S. government has communicated to it the need to secure a license for exporting its powerful AI processors such as the A100 and the yet-to-be-released H100 chips to China. This would prevent the export of these chips to China, one of its key markets.

Nvidia flagged that its third-quarter guidance included $400 million worth of such chips meant to be exported to China.

The manufacturer of GPU processors said it is in talks with the government to get exemptions for internal development and support activities, and its Chinese customers to take in products not falling under the new licensing norms.

Rival Advanced Micro Devices, Inc. AMD is also hit by the development, according to a statement given by a company spokesperson to Reuters.

In premarket trading, Nvidia shares were tumbling 5.73% to $142.29 and AMD was moving down 3.29% to $82.08, according to Benzinga Pro data.