Nvidia plummets as Trump tariffs bite
Nvidia’s shares fell nearly eight per cent on Thursday, wiping $273bn off its market value, as steep new tariffs and fears of fresh export restrictions rattled markets.
The leading chip maker closed down 7.8 per cent in the wake of US president Donald Trump announcing sweeping import duties.
Nvidia’s stock has now plunged 32 per cent from its peak in January, dragging its market cap down to $2.48 trillion from $3.66 trillion.
The tariff package includes a baseline 10 per cent levy on all imports, alongside targeted duties of 34 per cent on Chinese goods, 46 per cent on Vietnamese products and 26 per cent on imports from India.
While semiconductors are currently exempt, investors remain wary of retaliatory measures and broader supply chain fallout.
“This was the worst-case scenario for tariffs, and it wasn’t priced into the markets”, said Mary Ann Bartels, chief investment strategist at Sanctuary Wealth.
“If the S&P 500 can’t hold the 5,500 level, we may be looking at another 5-10 per cent downside”.
More than half of Nvidia’s revenue comes from overseas, and the tech heavyweight’s supply chain is deeply intertwined with Asia-Pacific manufacturing.
In particular, its most advanced chips are produced by the Taiwan semiconductor manufacturing company (TSMC).
What’s more, further pressure is squeezing the firm as the US considers new restrictions on Nvidia exports to China – particularly its H20 chip.
This is a lower performance model that was designed specifically to comply with earlier export controls.
Though talks remain at an early stage, any move to ban the H20 could further erode Nvidia’s China revenue, which currently makes up around a fifth of total sales.
Stacey Rasgon, senior analyst at Bernstein, said that such a move would make “zero sense”, warning it would ultimately hand over China’s growing AI chip market to competing firms like Huawei.
Markets across the board reacted sharply to tariff news.
The Nasdaq dropped 6 per cent, the S&P 500 sank 4.8 per cent and the Dow Jones industrial average slipped by nearly four per cent.
All in all, it was the worst single-day performance since the early days of the Covid-19 pandemic.
Adding to quibbling investor sentiment, analysts have warned of an approaching earnings recession as firms contend with higher input costs decreased profitability.
“Margin expectations for 2025 still look far too optimistic”, said Liz Ann Sonders, chief investment strategist at Charles Swab. “We’re not out of the woods.”