Key insights
- The article suggests Nvidia may continue selling GPUs to SMCI despite investigations into SMCI's potential sales of banned GPUs to China. Nvidia's revenue forecasts and pressure to maintain growth in the AI sector could prevent them from cutting ties with SMCI, despite potential legal and reputational risks. This could negatively impact Nvidia's stock in the short term due to regulatory scrutiny.
This bombshell news about SMCI selling banned GPUs to China is new for us. But investigation has been going on for some time by DOJ. Since it is also related to Nvidia, DOJ may have also made them part of investigation at some point. Which means that Nvidia aware or has some info about this shit.
But they didn't stop selling GPUs to SMCI all this time so why would they now? May be they will just tighten controls but I don't see why they will alienate their customer as it is also part of Nvidia revenue which they have forecasting to increase every quarter. They are under pressure due to Capex and AI shit and dropping SMCI will also negatively affect them. May be not long term but definitely in the short term.