New York, Jan 20, 2026, 17:17 EST — After-hours
Nvidia dropped Tuesday after Taiwan’s Inventec, a key producer of AI servers powered by Nvidia chips, indicated that approval for selling its H200 processor in China “appears to be stuck on the China side.” Shares closed down 4.3% at $178.07 in late trading. (Reuters)
The H200, an AI accelerator chip designed for training and running large models, plays a crucial role in the sector’s expansion, with China standing out as a pivotal market.
That’s why a customs hiccup hits hard. It’s not about a single part number. It’s the backbone of the AI rollout: servers, networking equipment, and the large orders that keep fabs and suppliers running smoothly.
Inventec President Jack Tsai told reporters that the U.S. is “open to it,” but the decision now rests with Beijing. “It appears to be stuck on the China side,” he said. (Reuters)
The remark comes amid a tense stretch for AI hardware, with valuations barely tolerating any hiccups on logistics or shifts in policy. For months, traders stuck to a straightforward approach—buy the picks-and-shovels—and now that strategy is under real scrutiny.
Other major AI-related chip stocks took a hit. Broadcom dropped 5.4%, AMD ended mostly flat, and Microsoft slipped 1.1%. Super Micro Computer, known as a bellwether for data-center demand, dipped 3.8%. The iShares Semiconductor ETF slid 1.5%, while the S&P 500 ETF declined 2.1%.
Meanwhile, Morgan Stanley dialed back its outlook on North American IT hardware, citing tight budgets and soaring component prices. Analysts warned of a “perfect storm” brewing from weakening demand, input cost inflation, and high valuations. (Reuters)
The warning targeted firms linked to servers and storage, the key segment that supports much of AI’s physical infrastructure. According to the bank’s newest survey, hardware budgets are expected to grow by only 1% year-over-year in 2026. (Reuters)
There’s a cleaner upside scenario as well: China might speed up shipments, making Tuesday’s selloff just a temporary blip. The tougher downside? A prolonged delay that pushes customers to reconsider deployments or look for alternatives, right as investors start pressing harder on 2026 demand forecasts.
Wall Street suffered its sharpest daily fall in three months on Tuesday, driven by fresh concerns over tariffs. Investors are now eyeing upcoming U.S. economic reports — a GDP update, January PMI figures, and the PCE inflation data — as well as any clear guidance on chip exports to China. (Reuters)
