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Companies that rely on the world's second largest economy for at
least a fifth of their revenue such as Nvidia, Advanced Micro
Devices and Intel fell as they get trapped in the U.S.-China
crossfire.
Nvidia fell 4%, Advanced Micro Devices 3.3% and Intel 0.7%,
while futures tracking the tech-heavy Nasdaq 100 index edged
0.5% lower.
The new restrictions being considered by the Commerce Department
would include a ban on the sale of Nvidia's advanced chip called
A800 without a special U.S. export license.
"With an update on export controls now expected, investors will
assess just how limiting the new rules will be for chip makers'
sales," said Susannah Streeter, head of money and markets,
Hargreaves Lansdown.
"A handful of tech companies pack a huge punch on Wall Street
due to their sheer size, so any wobble in confidence
reverberates on indices."
Rising expectations over the advancements in AI has helped Wall
Street gains this year, with Nvidia at the pole position on the
S&P 500 index with its 187% jump so far this year.
But the sharp rise in shares have also sparked doubts over lofty
valuations.
Nvidia is trading at 47 times its expected 12-months earnings,
while AMD is at a 31.2 multiple and Intel at 31.8, way above the
S&P 500's multiple at 19, according to Refinitiv data.
The Philadelphia chip index has surged more than 44% so far this
year, far ahead of the benchmark index's 14% rise.
Among other chip stocks, Marvell Technology, Applied Materials,
Intel , Microchip Technology fell between 1.1% and 3% on
Wednesday.
Across the Atlantic, Nordic Semiconductor, Dutch chipmaker ASML,
Milan-listed STMicroelectronics, however, gained between 1.2%
and 2%.
(Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur)
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