Is Nvidia Stock Severely Affected By President Trump's Tariffs?

2 months ago 18

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Keithen Drury, The Motley Fool

Tue, Apr 8, 2025, 6:15 AM 4 min read

Nvidia (NASDAQ: NVDA) has been 1 of the hottest stocks successful the marketplace since 2023 but has cooled alongside each of the different maturation stocks during the latest sell-off. Nvidia has been a apical banal due to the fact that of its engagement successful the artificial quality (AI) contention since its products powerfulness overmuch of the grooming and inference for that technology.

However, the banal precocious was present down much than 30% from its all-time high, owed to the interaction of President Donald Trump's tariff announcement. But is Nvidia genuinely affected by this? Or is it conscionable guilt by association?

Nvidia's graphics processing units (GPUs) and the different components that enactment them person seen monolithic maturation alongside AI request implicit the past fewer years. In conscionable 2 years, gross climbed from nether $30 cardinal to $130 billion, a full summation that nary institution has matched.

But with these caller tariffs, determination are fears that Nvidia's concern could beryllium importantly harmed.

First, Nvidia doesn't marque immoderate of the chips that spell into its GPUs. It sources a important magnitude of them from Taiwan Semiconductor Manufacturing (NYSE: TSM), which has astir each of its accumulation capabilities overseas. Taiwan was precocious deed with a 32% tariff, which would origin the terms of chips that spell into the company's GPUs to emergence significantly.

However, there's 1 important caveat: Semiconductors are exempt from this tariff rate. This means that the terms Nvidia is paying for its chips contiguous is the aforesaid arsenic it paid past week, which eases immoderate fears with its stock.

Next, let's determination to the company's lawsuit base.

Nvidia's biggest clients are the AI hyperscalers, which are large tech companies that are sparing nary disbursal successful gathering their AI capacity. Many of Nvidia's largest clients person said that they volition person grounds superior expenditures this year, chiefly owed to information halfway buildouts to tally their ain AI workloads arsenic good arsenic others done unreality computing offerings.

Investors volition perceive from these hyperscalers arsenic they study first-quarter results successful precocious April and aboriginal May, but my conjecture is that these plans person mostly remained unchanged. It's excessively important to seizure the AI marketplace successful its infancy, and immoderate alteration successful spending volition beryllium an accidental for competitors to prehend what they person fixed up.

Most of these companies person unbelievable currency flows, and if everything gets a spot much expensive, they tin devour the costs.

As a result, determination whitethorn beryllium a slight alteration successful information halfway buildouts this year, but apt not capable to truly impact Nvidia. I deliberation this makes Nvidia OK from this standpoint, too.