Analyst Sees Indirect Impact on Nvidia Chip Sales Amid New Tariffs
Nvidia (NVDA) shares declined up to 5% in premarket trading on Monday, continuing last week's losses as investors reacted to President Trump's announcement of new tariffs.
President Trump imposed a 10% tariff on Chinese imports and 25% on those from Mexico and Canada, surprising investors who had underestimated the risk. The tech-heavy Nasdaq (^IXIC) fell over 2% on Monday.
Nvidia's stock had already been affected by news last week that the Trump administration was considering tightening export restrictions on Nvidia chips to China. The administration is reportedly discussing expanding restrictions on Nvidia's H20 chips, designed for China.
China accounts for approximately 17% of Nvidia's projected 2024 sales. The news follows the release of a new AI model by DeepSeek, which raised questions about Big Tech's spending on AI infrastructure, leading to a tech sector sell-off. Nvidia lost 17% in a single day, the largest single-day loss in stock market history.
While semiconductors are not directly affected by the new tariffs, Bernstein analyst Stacy Rasgon noted that the duties could impact imports of data processing equipment using AI chips. Higher prices for these products could reduce demand and indirectly affect chip sales.
The US imported $39 billion worth of data processing equipment from China and $28 billion from Mexico in 2023. Foxconn is constructing a massive factory in Mexico to assemble servers using Nvidia's Blackwell AI chips.
The tariff announcement also impacted other chip stocks. Rival Advanced Micro Devices (AMD) and Qualcomm (QCOM) dropped about 2%, while Micron (MU) and Broadcom (AVGO) declined nearly 3%.
Nvidia CEO Jensen Huang met with Trump at the White House last week. According to sources, they discussed DeepSeek.