Nvidia Falls Pre-Market After Biden Administration Announces 'AI Diffusion' Rule: Retail Gets More Bearish or Retail Sentiment Sours

Shares of Nvidia Corp. (NVDA) fell in pre-market trading on Monday after investors reacted to the Biden administration’s new “AI Diffusion” rules, which impose export restrictions on semiconductor manufacturers.

Nvidia’s share price fell over 3% in pre-market trading, eroding the stock’s gains over the past month.

The cause of concern for Nvidia investors is a set of rules that the Biden administration announced in its last week of governance. These rules impose wide-ranging restrictions that seek to block China’s access to chips optimized for artificial intelligence (AI).

“The US leads the world in AI now, both AI development and AI chip design, and it's critical that we keep it that way,” U.S. Commerce Secretary Gina Raimondo said.

The countries with unfettered access to advanced AI chips include the UK, Canada, Australia, New Zealand, Germany, Japan, France, Belgium, Sweden, Spain, Ireland, Italy, Finland, Denmark, the Netherlands, Norway, the Republic of Korea, and Taiwan.

Companies in all other nations not subject to U.S. arms controls must apply for a special license to buy more than 1,700 of the latest AI chips.

This resulted in a sharp reaction from AI bellwether Nvidia, which called the rules “misguided” and said that “global progress is now in jeopardy.”

“In its last days in office, the Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review,” Nvidia said.

The company also praised the first Trump administration for the U.S.’s progress in AI and added, “We look forward to a return to policies that strengthen American leadership, bolster our economy, and preserve our competitive edge in AI and beyond.”

However, retail sentiment on Stocktwits dipped further into the ‘bearish’ territory (37/100) on Monday morning.

NVDA sentiment and message volume January 13, 2025, as of 8 am ET | Source: Stocktwits

Meanwhile, one user thinks investors are “waking up” to AI spending being a “blackhole.” 

However, another user pointed out that this downturn has nothing to do with Nvidia’s fundamentals.

Nvidia’s shares are up 5.8% in the past six months, while its one-year performance is relatively stellar, with gains of over 141%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<