What happened
Alibaba's (BABA 0.59%) stock was not a winning bet on Wednesday, although this wasn't really the Chinese company's fault. A media report about possible export restrictions from the U.S., which could potentially stunt the tech giant's growth in a hot segment, helped push the share price down. By the end of the trading day, Alibaba's stock was down by nearly 3%.
So what
Earlier that day, Reuters published a report stating that the Biden administration is contemplating a tightening of export controls on advanced processors. Such processors are essential to artificial intelligence (AI) applications.
Citing an unidentified "two people familiar with the matter," the news agency said that this would take the form of new restrictions in the currently existing set of limits imposed by the federal government.
The Commerce Department, the entity behind the restrictions, did not comment on the Reuters story.
Now what
At least one other organization potentially affected by such a move was more forthcoming.
Reuters quoted Nvidia CFO Colette Kress as saying at an investor conference that "Over the long-term, restrictions prohibiting the sale of our data center GPUs to China, if implemented, would result in a permanent loss of opportunities for U.S. industry to compete and lead in one of the world's largest markets and impact on our future business and financial results."
If that's the way a U.S. exporter feels, we can imagine the thoughts of a giant Chinese customer like Alibaba. Not only would its technological development in AI be curtailed, its stock would surely become less attractive to investors -- after all, these days, they expect leading tech companies to adopt AI in some fashion.
