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Nvidia, AMD slump as US government said to consider capping AI chip sales at 75,000 per Chinese buyer

The US is considering putting a cap of 75,000 on the number of AI chips that Chinese firms can purchase, per Bloomberg, citing people familiar with the matter.

Both Nvidia and Advanced Micro Devices are lower in premarket trading, as this limit would apply to the combined number of H200 and MI325 chips that buyers would be able to amass.

Of course, the broad risk-off tone as Middle East tensions weigh on global equities, in particular memory stocks, is also contributing to downside on Tuesday morning.

Leading Chinese tech companies like Alibaba and ByteDance (parent company of TikTok) would reportedly like to purchase a number of chips well above this potential limit.

These mulled limits are still currently a moot point. On Nvidia’s Q4 conference call, CFO Colette Kress mentioned that the company still does not yet know whether it will be able to ship any AI chips to China. Whether or not Beijing will allow tech companies to import the chips is an unsettled question.

In January, the Commerce Department revised its export license review policy for certain semiconductors, laying out some of the terms and stipulations that companies would need to abide by in exporting these processors to China. That came on the heels of US President Donald Trump’s Truth Social post in December that said export restrictions on these chips would be relaxed.

(Since more powerful AI processors have seemingly been able to make their way into China in violation of export controls, one wonders how difficult it would be for Chinese giants to ultimately accumulate all the H200s they desire if China permits these imports.)

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Luke Kawa, Tasha Matsumoto

Stocks fall in another volatile trading session as the war in Iran continues into its fourth day

Stocks pared steeper losses after President Trump said in a Truth Social post that the US Navy would escort tankers through the Strait of Hormuz.

Bear Roar

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Oil to lows and stocks to highs of day after President Trump says US will insure and escort oil tankers through the Gulf

West Texas Intermediate futures dipped to their lowest level of the day while the SPDR S&P 500 ETF continued to pare losses after US President Donald Trump ordered immediate action to improve the flow of oil to global markets, as the US-Iran conflict caused shipments through the Strait of Hormuz to slow to a crawl.

In a Truth Social post, the president said the US International Development Finance Corp. would provide “political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf,” adding that the US Navy would escort tankers through the Strait of Hormuz as soon as possible, if necessary.

Bloomberg’s Javier Blas explained that having oil-producing countries in the region able to reload crude on tankers is critical to avoiding production shut-ins.

Of course, there is a risk of unintended consequences from a heightened US presence in the region’s most strategically important area, from the perspective of global markets, during a time of kinetic military action. US naval escorts through the strait could dramatically increase the risk of an incident that massively escalates the conflict.

War has pushed global markets into the danger zone

Correlations within the US stock market and between asset classes are rising.

Screaming Man

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Max Knoblauch8h

Versant climbs in its first quarter after spin-off, announces dividend and $1 billion stock buyback

Versant Media, the owner of cable TV assets including CNBC, MS Now, and Golf Channel, reported its first earnings since spinning off from Comcast earlier this year. The stock climbed 3% after markets opened.

Investors appear to like Versant’s $1 billion stock buyback plan and its newly announced quarterly dividend of $0.375 per share.

Versant reported Q4 revenue of $1.55 billion, shy of the $1.56 billion expected by analysts polled by FactSet. The company posted earnings of $0.72 per share in the quarter, below estimates of $0.96 per share.

MS Now, formerly MSNBC, was the most watched news channel on election night in November, Versant said. The network will launch a direct-to-consumer platform later this year.

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Energy price spike on Mideast war has traders betting on no Fed cuts through June

A war in the Middle East, and the resultant upward pressure on oil prices, has caused traders to reverse bets that the Federal Reserve will cut interest rates in the first half of this year.

The prediction market-implied odds of a rate cut in June are less than 45% on Tuesday morning. Last week, the odds of a rate cut in June were around 60%. This comes as US national average gasoline prices rose 3.7% on Monday, their biggest one-day jump since 2005, according to data from the American Automobile Association.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

In the short term, higher energy prices put upward pressure on inflation and downward pressure on economic activity. Higher gasoline prices reduce households’ ability to spend more on other discretionary goods and services.

Normally, Fed officials would want to “look through” the impact of higher energy prices as a temporary source of upward pressure on inflation that is not indicative of the underlying trend. That’s why energy (and food) prices are stripped out of core inflation. However, this time might be different:

Inflation has run above the Federal Reserve’s target for a prolonged period.
The central bank is a little scarred by the un-transitory and severe postpandemic inflation (which was meaningfully accelerated by Russia’s invasion of Ukraine).
Monetary policymakers were already signaling that the stabilization in jobs data and previous cuts, which brought their policy rate closer to a neutral setting, meant the bar for additional easing was higher.

“I think the Fed will be reluctant to elevate growth over inflation risks right now,” wrote Neil Dutta, head of US economics at Renaissance Macro Research. “Cuts have been a close-call as it is; thus, it’s tough to look through inflation when you are coming off a period of high inflation.”

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