Nvidia Faces Uncertainty Amid Potential Tariffs and Export Restrictions
Despite better-than-expected quarterly profits, a top Nvidia executive stated that President Trump’s possible tariffs and export restrictions on the company’s potent computer chips are still “unknown,” which caused its stock to plummet.
Nvidia Stock Drops After Mixed Forecast
As investors processed CEO Jensen Huang’s company’s mixed forecast in its fourth-quarter results announcement, Nvidia shares were down more than 4% Thursday morning.
Concerns Over Macroeconomic Issues and Tariffs
As Trump increases pressure on China, Wall Street continues to be concerned about macroeconomic issues. During a call with analysts, Nvidia CFO Colleen Kress recognized the uncertainties.
“Tariffs, it’s a bit of an unknown right now,” Kress remarked. “Until we learn more about the US government’s proposal, including its timing, ‘where,’ and ‘how much,’ it remains uncertain. We are currently waiting, but once more, we would always adhere to export regulations and/or tariffs in that fashion.”
Nvidia’s Revenue Growth and Profitability Performance
Although revenue and profitability exceeded projections, critics noted a minor decline in margins when Nvidia increased production of its new Blackwell AI processors. Revenue jumped 78% to $39.33 billion, but as Nvidia gets bigger, growth has moderated a little from its frantic rate.
Market Reaction to Nvidia’s Revenue Forecast
Nvidia predicted $43 billion in sales for the current quarter, which was larger than most experts had predicted but still seemed to frighten some of them. Logan Purk, an analyst at Edward Jones, called the guidance “slightly underwhelming.”
In addition to the 10% tariff China now faces on imports, Trump stated in a Thursday morning post on Truth Social that he will put an additional 10% tariff on the country. On March 4, tariffs against Canada and Mexico will go into force.
Potential Higher Tariffs on Computer Chips
The president has previously suggested a possible “25% and higher” tariff on computer chips, which has increased uncertainty.
The tech-heavy Nasdaq Composite Index, which was down roughly 200 points or 1% in early trading, plummeted along with Nvidia.
Nvidia’s Role in the AI Market
Nvidia is the top provider of state-of-the-art AI chips, and its customers include Elon Musk’s xAI and Microsoft-backed OpenAI.
Despite the market tremors, Nvidia’s results indicate the “AI revolution thesis” is still “rock solid,” according to Wedbush analyst Dan Ives. He restated his prediction that Nvidia’s market capitalization will reach $4 trillion this year.
Analyst Predictions on US-China Trade Tensions
Do Trump’s tariffs, export restrictions, and other macro variables raise concerns? “There are, of course,” Ives wrote in a note to clients.
“But in our opinion, China’s tariffs and export restrictions will ultimately cause more harm than good, and this is all a high-stakes game to drive a deal with China at the negotiating table sometime in 2025,” Ives continued.
Nvidia CEO Jensen Huang’s Optimism About AI Growth
Huang told analysts that there is “extraordinary” demand for the Blackwell chips and that significant advancements in AI are ahead. “The era of artificial intelligence is just getting started. In 2025, we’ll increase significantly,” he said.
Possible Impact of Export Restrictions on Nvidia
Above China’s access to Nvidia’s top chips, which are needed to train and power sophisticated AI chatbots, could be restricted by tighter export regulations, according to Trump administration officials.
