What happened
Shares of Qualcomm (QCOM +1.85%) were down 2% as of 12:35 p.m. ET on Wednesday. The dip came after a report from The Wall Street Journal that the Biden administration was considering restricting the shipment of artificial intelligence (AI) chips to China and other countries without first obtaining a license.
This news follows similar restrictions put in place last year on advanced computing chips.
NASDAQ: QCOM
Key Data Points
So what
The AI boom has sent the Nasdaq Composite soaring 30% year to date, as many leading tech stocks could see growing revenues from demand for AI technologies.
Qualcomm has participated in the rally but lags the index, up just 6% year to date. The company, which supplies technologies for wireless devices and the Internet of Things, says it is "uniquely positioned" to capitalize on the opportunity in AI use cases on edge devices.
Qualcomm does a significant amount of business in China, so any regulations impacting sales to China will understandably weigh on the shares.
Now what
Despite the reports of potential new restrictions on chip exports, Qualcomm shares were already trending down in recent weeks. The weak macro environment is contributing to a slower recovery in China, impacting Qualcomm's near-term revenue.
In the most recent quarter, Qualcomm reported a 17% decline in revenue over the year-ago quarter. Analysts expect full-year revenue to be down 18% before rebounding nearly 9% next year.
Until there is better visibility of global demand for Qualcomm's wireless products, the stock is likely to remain under pressure in the near term, but the stock is worth watching for the long-term opportunities in growing shipments of AI-enabled devices and platforms over the next several years.
