NVIDIA (NVDA) Stock: Made in America Plan Could Shield Company from Trade Wars

TLDR:

NVIDIA stock rose 5.2% to $104.07 in premarket trading amid optimism over easing U.S.-China tensions President Trump indicated 145% tariffs on Chinese imports will come down “substantially” after negotiations NVIDIA faces uncertainty with AI diffusion rules set to take effect May 15, potentially impacting 10% of sales Amazon clarified there are “no fundamental changes in expansion plans” despite reports of delayed data center leases NVIDIA plans to build AI supercomputers entirely in the U.S. with manufacturing in Arizona and Texas

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NVIDIA’s stock showed positive movement on Wednesday, rising 5.2% to $104.07 in premarket trading. This follows a 2% gain on Tuesday, reversing a 4% drop on Monday when shares fell below the psychologically important $100 level.

NVIDIA Corporation (NVDA)

The chip maker’s shares moved up with the broader market after President Donald Trump announced that U.S.-imposed tariffs of 145% on imported goods from China will come down “substantially” after the two sides negotiate a deal. This news lifted futures tracking the Nasdaq 100 by 2.3%.

While lower tariffs on China won’t directly affect NVIDIA—which sources most of its chips from Taiwan—the development reduces fears over potential retaliation and sector-specific levies on imported semiconductors.

Despite this positive development, tariff uncertainty persists. The Trump administration has yet to clarify how it will apply former President Biden’s AI diffusion rules to control chip exports before they take effect on May 15.

BofA Securities analyst Vivek Arya noted the upcoming AI Diffusion Rule remains the “biggest near-term risk,” potentially shaving off around 10% of sales and up to 11% of earnings per share. Nevertheless, Arya maintained a Buy rating on NVIDIA stock while lowering his price target to $150 from $160.

Competitive Pressure from China

Adding to market concerns, reports indicate that China’s Huawei Technologies plans to begin mass shipments next month of its 910C artificial intelligence chip. The Chinese chip reportedly equals the capabilities of NVIDIA’s older H100 chip.

This development comes amid U.S. export restrictions on semiconductor technology to China. The Biden administration issued new regulations on chip exports in January, with the rules set to take effect after a 120-day comment period ends in May.

NVIDIA executive Ned Finkle has warned that these restrictions will impose control over how “America’s leading semiconductors, computers, systems, and even software are designed and marketed globally.”

Oracle executive Ken Glueck cautioned that the new rules could reduce the global chip market by 80% for U.S. chip companies, adding that “a rule of this consequence on that timetable will turn the U.S. cloud industry upside down.”

Manufacturing Shift to United States

In response to the changing trade landscape, NVIDIA announced plans to make AI supercomputers entirely in the U.S. According to the company’s blog, it has “commissioned more than a million square feet of manufacturing space to build and test NVIDIA Blackwell chips in Arizona and AI supercomputers in Texas.”

Mass production is expected to ramp up in 12 to 15 months. At the GTC conference in March, NVIDIA Chief Executive Jensen Huang noted that tariffs would not hurt the company “in the short term” as it seeks to move more chip production to the U.S.

NVIDIA will need a license to export its H20 chips and expects a charge of $5.5 billion in its first quarter, which ends on April 27. Some analysts believe the company may not be granted the export license.

Cloud Provider Commitment

Recent market volatility was partly triggered by reports that Amazon might be delaying several new data center leases. However, Kevin Miller, vice president of global data centers at Amazon Web Services, clarified that the changes were “routine capacity management” and there haven’t been “any recent fundamental changes in our expansion plans.”

This clarification helped ease concerns about potential reduced demand for NVIDIA’s AI chips. Earlier this year, Amazon indicated plans to increase its spending by 27% or $105 billion—mostly on AI data centers.

Amazon CEO Andy Jassy has emphasized the company’s partnership with NVIDIA, noting that “most AI (computing) has been driven by NVIDIA chips, and we obviously have a deep partnership with NVIDIA and will for as long as we can see into the future.”

Meanwhile, Alphabet plans to increase its spending by 57% for a total of $75 billion, while Microsoft’s spending on AI data centers is set to slow next year.

Despite some mixed signals from cloud providers, NVIDIA continues to show strong earnings growth. The company beat analyst estimates in its fourth quarter, earning 89 cents per share on $39.33 billion in sales.

The company’s top three regions by sales were the U.S. at 47%, Taiwan at 16%, and China at 13% of total sales. NVIDIA also revealed that three customers now account for more than 10% of its revenue.

Among NVIDIA’s products, Blackwell has already become its fastest-growing segment, according to management. For the current quarter, NVIDIA expects adjusted gross margins of 71%.

The stock has fallen below its 200-day moving average and needs to retake its 50-day moving average before it becomes a buy again. Shares have been hitting resistance at that level since December.

NVIDIA replaced Intel in the Dow Jones Industrial Average last November, becoming the fourth Magnificent Seven stock to join the list of blue chips, alongside Apple, Amazon, and Microsoft.

NVIDIA’s current price-to-earnings multiple is around 19 times its forecast profit for 2026, according to BofA Securities. The stock has an ideal Earnings Per Share Rating of 99, while its Composite Rating sits at 68.

President Trump’s statement about reducing tariffs on Chinese imports gave NVIDIA and other chip stocks a welcome boost this morning. Advanced Micro Devices rose 3.6% and Broadcom gained 3.4% in premarket trading.

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