Archer Aviation (NYSE: ACHR) stock is losing ground in Monday's trading due to geopolitical risk factors. The company's share price was down 7.1% as of 2:45 p.m. ET amid a 0.1% decline for the S&P 500 (SNPINDEX: ^GSPC) and a 0.6% decline for the Nasdaq Composite (NASDAQINDEX: ^IXIC). The flying EV specialist's stock had been down as much as 10% earlier in the session.
Archer Aviation stock is falling today on the heels of news that the U.S. is expanding its restrictions on the export of artificial intelligence (AI) chips and semiconductor manufacturing equipment to China, Russia, Iran, and North Korea. AI technologies have emerged as a key competitive battleground between rival world powers, and investors are worried that rising geopolitical tensions could create bearish pressures for stocks.
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Before the market opened this morning, the Biden administration detailed new restrictions on AI chip exports. While restrictions were already in place that prevented the export of advanced processors and semiconductor manufacturing equipment to China, the scope of limitations is poised to increase. In addition to expanding export restrictions to block sales to other adversarial nations, the new regulations will put a cap on the number of AI chips that can be sold to many other countries. Meanwhile, the U.S.'s closest allies will have unfettered purchasing access.
Archer Aviation is a U.S.-based company and shouldn't have any trouble getting its hands on domestically sourced chips and materials. On the other hand, it's possible that rising tensions between the U.S. and China could make it more difficult to access other components. Beyond potential component-sourcing issues that could impact Archer specifically, the stock market is seeing a day of broad-based, risk-off movement in response to the news.
Even with some big sell-offs early in 2025's trading, Archer Aviation stock is up 61.5% over the last year, as of this writing. The company has a market capitalization of roughly $3.6 billion, despite having yet to record revenue from its core business.
With the business trading at growth-dependent valuation and still in a pre-revenue state, Archer Aviation stock will likely continue to see big movement in conjunction with macroeconomic and geopolitical news. On the other hand, it's possible that rising geopolitical tensions could actually create a bullish catalyst for the company.
Archer has recently announced that it's entering the defense industry through a partnership with Anduril to create hybrid-propulsion, electric vertical takeoff and landing (eVTOL) aircraft. If Archer winds up winning defense contracts for its flying eVTOL aircraft, the company's share price could soar.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.