What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ: NVDA) fell 6% in the afternoon session after stocks pulled back (Nasdaq -1.5%, S&P 500 -1.2%) amid fresh concerns about trade tariffs. The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions.
Adding to the market unease, the President announced plans for new tariffs on auto imports before the planned "reciprocal" tariffs on April 2, 2025.
Also, the Financial Times reported that Chinese regulators prevented the country's tech companies from using Nvidia's H20 chip. The chip was designed to meet U.S. trade ban rules, but it seemed Chinese regulators were worried they could breach energy-efficiency rules.
Adding to the worries, there were also reports that the U.S. had added more Chinese companies to its trade blacklist, citing national security concerns. As a result, these companies would now need government approval to purchase American technology. Among those affected were tech firms that depended heavily on advanced chips made by U.S. manufacturers, raising concerns about the US chip makers' ability to maintain strong sales in the Chinese market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Nvidia? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Nvidia’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 6.9% on the news that markets experienced a boost after data from the Bureau of Labor Statistics revealed that inflation for the month of February 2025 came in better than expected. The CPI rose 0.2% from the previous month (vs estimates for a 0.3% increase), while headline inflation rose 2.8% year on year (vs estimates for a 2.9% y/y increase). The data revealed inflation continued to edge closer to the Fed's 2% target, but not quite there yet. The reaction wasn't anything wild, but the sentiment leaned positive. The Nasdaq led the way, climbing 1.4%, boosting some tech stocks.
Separately, Wall Street analysts noted that some of the recently beaten-down Magnificent Seven stocks were now trading at attractive valuations, presenting solid entry points for investors looking to capitalize on their potential rebound.
Also, Reuters reported that TSMC reached out to chipmakers, including Nvidia, AMD, Broadcom, and Qualcomm, about a potential deal for Intel's foundry business.
Nvidia is down 18% since the beginning of the year, and at $113.44 per share, it is trading 24.1% below its 52-week high of $149.43 from January 2025. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $17,639.
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