Why Artificial Intelligence (AI) Stock Leaped Higher Today (AI 6.13%) was the beneficiary of some good news on the government front Tuesday. On the back of the latest Biden administration attempt at tightening restrictions on advanced computer chip exports from the U.S. to China, the company’s share price saw a more than 6% lift skyward. That compared very favorably to the marginal decline of the S&P 500 index that day.

Biden cutting chip supplies to China

The president plans to shut off exports of such chips entirely to the sprawling Asian nation for fear of them being used in artificial intelligence (AI) functionalities harnessed by that country’s military.

The ban, which expands a current set of restrictions limiting shipments of such products to China, would go into effect in 30 days. It would cover a wider range of next-generation chips and the goods to manufacture them. Among the businesses affected would be leading chip maker Nvidia (NVDA -4.68%), among others.

Commerce Secretary Gina Ramondo said that the restrictions would likely be revised as necessary, likely once per year. 

In remarks quoted by news agency Reuters, an unnamed spokesperson at the Chinese embassy said that country’s government “firmly opposes” the latest restrictions mandated by its U.S. counterpart.

Domestic AI developers get a break

Without meaningful competition from developers in large and ambitious China, and other AI companies stand a better chance of success. It is still early days for the AI sector, but already it has become a hot technology not only among investors but with businesses aiming to automate certain products and the general public looking for help with a variety of tasks. 

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends The Motley Fool has a disclosure policy.

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