NVIDIA Corporation ( NVDA ) shares are trading higher Wednesday, rebounding from Tuesday’s sharp decline, as chip stocks across the board recover from heavy selling pressure. Here's a look at what's driving the movement.

What To Know: Nvidia ( NVDA ) shares fell more than 4% on Tuesday alongside several chipmakers amid multiple developments.

Nvidia ( NVDA ) is at the center of U.S. policy discussions regarding AI chip exports, which may help explain some of the recent volatility. Bloomberg reported Tuesday that the Biden administration was weighing new export restrictions aimed at curbing the sale of advanced AI chips to countries seen as potential national security threats.

While China is already subject to these restrictions, there is talk of expanding the controls to other nations, including those in the Persian Gulf, where AI infrastructure development has been accelerating.

The selloff in the broader chip sector on Tuesday was also partly driven by weak guidance from ASML Holding Inc. . The company lowered its full-year sales forecast due to weaker demand for non-AI chips. ASML shares plummeted 16%, dragging other chipmakers down with it.

Nvidia ( NVDA ) and other semiconductor stocks are bouncing back Wednesday. The rebound appears partly due to optimism around AI-related demand, with ASML CEO Christopher Fouquet stating that the company remains “quite optimistic” about the long-term growth in the AI segment on a conference call. Fouquet also noted that lower chip demand is mainly coming from the automobile and consumer electronics industries. 

"We are still quite optimistic about AI," Fouquet said Wednesday morning.

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NVDA Price Action: Nvidia ( NVDA ) shares were up 3.56% at $136.30 at the time of writing, according to Benzinga Pro.

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