As AI strength has strong momentum for 2-3 months already, its momentum could be slower now especially as less favourable news on AI GPU China export lately. Although White House approve export permit to Nvidia H20 & AMD MI-308 AI GPU to China market, a few issues lingering. Firstly, US government requires these GPU China export to pay 15% extra tax that may affect profit margin, pricings, & sales of these low-end AI GPUs. On the other hand, although China clients are keen to buy these chips, China government complains Nvidia H20 chips’ cyber-security on possible back-door or kill switch and discourage China firms from relying on it. Although Nvidia pushes back those comments quickly, such noise may keep a lid on AI stocks in the near term. Most top AI stocks like Nvidia, TSMC, Micron, Broadcom, & AMD have big gains and this noise could become a good excuse for profit-taking correction.
Lastly, ongoing tariff uncertainties is another hurdle for the market this month as several high-profile tariff negotiations may sound bad before eventual agreement. Besides concerning progresses of Switzerland, Canada, Brazil, & India, the biggest worry would be the Sino-US negotiation as even the truce extension seems uncertain until the last day. During such one-to-one negotiations, harsh rhetorics are common before an eventual agreement. Unfortunately, such rhetoric could spark fear and profit-taking.
