Nvidia leads tech stock declines as Trump official says ‘no federal bailout’ for AI

Nvidia (NVDA) stock led the tech sector lower on Thursday, dropping as much as 4% after a Trump official said the government had no intention of backstopping the artificial intelligence industry in reference to comments by OpenAI’s (OPAI.PVT) CFO.

White House AI and crypto czar David Sacks wrote on X, “There will be no federal bailout for AI. The U.S. has at least 5 major frontier model companies. If one fails, others will take its place.”

Sacks went on to say, “I don’t think anyone was actually asking for a bailout. (That would be ridiculous.) But company executives can clarify their own comments.”

The post was in response to remarks from OpenAI’s CFO Sarah Friar during a Wall Street Journal conference on Wednesday regarding the financing of chips.

Friar said the maker of ChatGPT would want a government “guarantee” that would make the financing of AI chips for data centers easier.

OpenAI CEO Sam Altman later shot down the idea that the company is seeking a government guarantee to protect it against failure.

Chipmakers were already in the red on Thursday following Qualcomm’s (QCOM) quarterly results on Wednesday afternoon. The results were strong, but investors have been jittery due to concerns about overvaluation in the sector.

Analysts have been calling out that the increasing entanglement among companies at the center of AI is adding to the risk of a bubble.

Nvidia announced in late September that it would invest up to $100 billion in OpenAI (OPAI.PVT) in a deal where the company would utilize Nvidia chips for training and running its next-generation models.

OpenAI has also entered into agreements with Oracle (ORCL), CoreWeave (CRWV), chipmakers Advanced Micro Devices (AMD) and Broadcom (AVGO), and most recently, e-commerce giant and cloud provider Amazon (AMZN).

Nvidia’s decline on Thursday comes on the heels of a sell-off in the prior session after CEO Jensen Huang told the FT that China “will win” the AI race with the United States.

Huang later stated on X that the foreign country is “nanoseconds” behind the United States in artificial intelligence.

“It’s vital that America wins by racing ahead and winning developers worldwide,” wrote Huang.