Advanced Micro Devices (AMD -1.03%) stock is losing ground in Tuesday's trading. The company's share price was down 1% as of 11:15 a.m. ET, according to data from S&P Global Market Intelligence.

The U.S. Department of Commerce announced today that it was extending and updating restrictions on exporting ultra-high-end semiconductors to China. The move is intended to curb China's growing artificial intelligence (AI) capabilities and has been highlighted by analysts as a particularly unfavorable development for AI leader Nvidia, but it could have a negative impact on AMD's business as well.

The U.S-China chip war is ramping up

As a result of new restrictions introduced by the Commerce Department, Nvidia will be prohibited from selling modified versions of its most advanced GPUs in China. Notably, the company had specifically modified its A800 and H800 GPUs in order to comply with previous rules introduced by the U.S. and allow them to be eligible for sale in the Chinese market. Intel's Gaudi2 chip will also reportedly be banned from export under the new restrictions. 

While Nvidia is the clear leader in GPUs for AI and accelerated computing, AMD also has a strong position in the market. Crucially, it wants to get even stronger and challenge Nvidia's edge in the space. If AMD is successful in its aims to capture more of the ultra-high-end GPU market, it's reasonable to expect that it will come up against more prominent roadblocks if restrictive dynamics between the U.S. and China remain in place or intensify. 

What do AI and geopolitical risks mean for AMD stock?

In addition to banning the export of certain high-performance processors, the U.S. has also put pressure on semiconductor equipment companies including ASML to prevent the sale of advanced fabrication machinery in China. Meanwhile, the vast majority of the world's ultra-high-performance chips are fabricated by Taiwan Semiconductor Manufacturing in Taiwan -- which China asserts is its territory. AI chips are at the center of rising tensions between the two world powers. 

Artificial intelligence technologies present exciting growth opportunities for AMD, but access to advanced AI capabilities has also become a national security issue. The new U.S. export restrictions may not have a meaningful impact on AMD's performance in the near term, but they do suggest narrower growth opportunities. Geopolitical uncertainty remains a key risk factor for investors to consider.