Nvidia Stock Slides as Key Customers Amazon, Microsoft Back China Export Curbs
Tech giants' support for new legislation adds regulatory pressure and highlights a growing competitive rift in the AI chip sector, threatening Nvidia's already strained China revenue.
Nvidia Corp. (NVDA) shares fell sharply in morning trading, sliding more than 3.5% after reports that two of its largest customers, Amazon and Microsoft, are supporting new U.S. legislation aimed at further restricting the export of advanced artificial intelligence chips to China.
The move signals a significant escalation in the U.S.-China tech rivalry, placing the dominant AI chipmaker in a precarious position between regulators and its key cloud-computing partners. The stock traded at $186.86, down 3.58%, as investors weighed the dual threat of increased regulatory headwinds and a shifting competitive landscape.
At the center of the issue is the proposed Guaranteeing Access and Innovation for National Artificial Intelligence (GAIN) AI Act. According to reports first published by The Information and The Wall Street Journal, both Microsoft and Amazon’s cloud unit have expressed support for the bill. The legislation would compel U.S. chipmakers to prioritize domestic demand for high-end AI processors before exporting them to China and other nations of concern.
This development presents a formidable challenge to Nvidia, which has been navigating increasingly stringent export controls imposed by the Commerce Department. The company’s business in China, once a major growth driver, has already been significantly impacted. China accounted for over 13% of Nvidia's revenue in the third quarter of fiscal 2025, but CEO Jensen Huang has acknowledged that U.S. restrictions have caused its market share for advanced AI chips in the country to plummet from dominant levels.
Earlier this year, the company warned it expected to take a $5.5 billion hit due to the tightening rules, underscoring the material risk that further curbs represent.
What makes the support from Amazon and Microsoft particularly potent is their dual role as both Nvidia's primary customers and emerging competitors. Both tech titans are investing heavily in developing their own in-house AI silicon to reduce their reliance on Nvidia and control costs within their vast data center operations.
Microsoft unveiled its custom Maia 100 AI accelerator last year, designed to power its Azure cloud and AI services. Similarly, Amazon Web Services (AWS) has developed its Trainium and Inferentia chips, which it claims offer significant cost and performance advantages for specific AI workloads. For instance, Amazon has stated that its Trainium 2 instances can be nearly 40% cheaper than comparable systems using Nvidia's H100 GPUs.
By backing legislation that could further limit Nvidia's access to a major international market, these companies could be strategically leveling the playing field as they ramp up their own chip capabilities. This alignment of corporate interest with national security policy creates a complex dynamic for Nvidia, which is now actively lobbying against the GAIN AI Act.
Despite the immediate bearish reaction, Wall Street's long-term outlook on Nvidia remains overwhelmingly positive. The consensus analyst rating is a strong buy, with an average price target of $231.48, suggesting a significant upside from current levels. This reflects a belief that the insatiable demand for AI computing in the U.S. and other allied markets will more than compensate for the turmoil in its China business.
However, the latest developments introduce a new layer of uncertainty. The GAIN AI Act has bipartisan support and could be attached to the must-pass National Defense Authorization Act, potentially fast-tracking its approval. For Nvidia, the path forward involves a delicate balancing act: appeasing Washington, navigating the strategic maneuvers of its biggest clients, and defending its commanding position at the top of the AI hardware market.