Nvidia stock has fallen 30% from its November 2024 peak of $153, wiping out about $1.1 trillion from the company’s market capitalization, according to Google Finance.
One thing contributing to the drop is the results of the 2024 election which brought Donald Trump back to the Oval Office. Since April 2, his tariff policy has thrown markets into turmoil.
And despite Trump’s trumpeting of a 90-day pause on most tariffs, Nvidia could be in worse shape. That’s because tariffs are high on countries where Nvidia products are built. More specifically, Taiwan faces a 34% tariff while China’s rose yesterday to 125%.
Is the drop in Nvidia’s stock a buying opportunity. I see no reason to buy now because although orders may have soared in the current quarter in anticipation of tariffs, I expect the company’s May 2025 earnings report to feature a disappointing growth forecast as a result of tariff uncertainty.
More specifically, the uncertainty is due to the difficulty of answering precisely the following questions:
- How much will tariffs on Taiwan and China increase Nvidia’s costs?
- Will Nvidia pass those cost increases on to customers?
- If so, will Nvidia be able to meet its growth targets for the current quarter and the year?
- If Nvidia decides to hold prices constant, how much will the company’s margins decline?
- In light of economic uncertainty caused by the ongoing tariff tit-for-tat, are companies cutting back on capital expenditures?
- If so, how much is that reducing demand for Nvidia GPUs?
Nvidia remains bullish. In March, CEO Jensen Huang said tariffs would not cause meaningful short-term harm to the company due to the company’s agile supply chain; demand for AI would drive demand, and TSMC was building a plant in Arizona, according to Barron’s.
Nvidia declined to comment. A spokesperson referred me to a March 2025 company statement. “Tariffs will have a little impact for us short term. Long term, we’re going to have manufacturing onshore,” Huang said in the statement.
Read on for why Nvidia’s costs could rise significantly, whether Nvidia will pass along those costs to customers, and how the uncertainty around future moves in the global tariff wars may crimp consumer spending and company’s investments in generative AI.
What To Expect From Nvidia’s Next Earnings Report
Nvidia will report quarterly financial results next month featuring slower top-line growth and thinner margins based on the company’s forecasts when it last reported in February.
- First quarter fiscal 2026 revenue: $43 billion – plus or minus 2%, according to a company release – which is up 65% from the year before and $700 million more than estimates, according to SeekingAlpha.
- First quarter fiscal 2026 gross margin: 70.6% plus or minus 0.5 percentage points – an 8.4 percentage point drop from the year before, according to a company release.
Nvidia expressed enthusiasm about its prospects. “We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter,” said Huang in a statement. “AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.”
Analysts were underwhelmed by Nvidia’s results – which lacked “the positive shock value of some of last year’s reports,” Sungarden YARP Portfolio Investing Group Leader Rob Isbitts told SeekingAlpha. Nvidia’s stock is likely to trade “more on raw demand and supply, rather than on some sort of surprise element,” Isbitts added.
“Guidance was slightly underwhelming,” Edward Jones analyst Logan Purk said in a report featured by Bloomberg. “We think it will be challenging for management to continue to significantly beat expectations for future growth,” Purk added.
How Tariffs Could Affect Nvidia’s Growth Prospects
Tariffs could increase significantly the prices of some Nvidia products. However, it is unclear whether Nvidia will pass all of its increased costs on to customers and whether the higher prices would lower demand.
A more significant question for Nvidia’s future is whether companies will view the high investment in generative AI as being worth the $1 trillion Goldman Sachs estimated. If the technology enables companies to do better work with fewer people, demand for generative AI is likely to remain strong in the event of a recession.
How Tariffs Could Raise Nvidia’s Prices
Not all of Nvidia’s products are likely to be harmed by Trump’s tariffs.
For example, fears of a Trump administration crackdown on Nvidia’s H20 chip – which the company has been exporting to China – may not be realized. The reason? “Nvidia promised the Trump administration new U.S. investments in AI data centers,” according to an NPR report featured by Reuters.
However, tariffs could raise consumer personal computer prices by as much as 50%, according to WCCFTech. These estimates were made April 3 when the tariff on Chinese goods was a mere 54% – a far cry from the 125% tariff imposed on April 9.
Tariffs could raise manufacturer’s suggested retail price prices on the following Nvidia gaming machines by at least 50% – based on the latest triple-digit tariff:
- NVIDIA GeForce RTX 5090 from $1,999 to $2,998.50, according to WCCFTech. Applying the 125% tariff would send the price to $4497.75
- NVIDIA GeForce RTX 5080 from $999 to $1,498.50, WCCFTech noted. The 125% tariff would send the price to $2,247.75
It remains unclear whether Nvidia will be able to avoid tariffs on GPUs for now. The tariffs could be avoided if actual products are assembled in the U.S., noted Tom’s Hardware.
For now, Nvidia may be able to ship “actual GPUs and processors/chipsets to the U.S. without paying import duties along with half-finished logic boards – but paying an import tariff — then assemble actual products in the U.S,” reported Tom’s Hardware.
Tariffs Could Lower Demand For Artificial Intelligence
Generative AI has been in search of a killer app, as I wrote in the Boston Globe. There has been no obvious progress on this goal and the investment required for the technology is enormous – potentially totaling $1 trillion, according to Goldman Sachs.
Prior to the tariff announcement, the largest hyperscalers – Amazon, Google, Meta Platforms, and Microsoft – announced plans to spend $270 billion on generative AI data centers in 2025, according to the Wall Street Journal.
However, that spending could take a hit – especially for companies like Meta and Google which are dependent on advertising for much of their revenue. If tariffs and the resulting uncertainty cause a recession – due to rising prices and fear of declining demand and higher unemployment – companies could decide to cut back on their generative AI spending.
The reason for cutting back would be a simple realization that the return on investment in generative AI is not yet compelling. Amazon’s cloud-computing arm historically has generated $4 of incremental revenue for every $1 of capital spending, TD Cowen John Blackledge tech analyst told the Journal. Generative AI’s ratio “is currently something like 20 cents for every dollar,” Blackledge added.
Microsoft, which plans to spend $80 billion on infrastructure in the current fiscal year, is slowing construction – including a $1 billion project in Ohio. Microsoft canceled leases in the U.S. and Europe — partly due to an oversupply of data-center space relative to the company’s demand forecast, noted TD Cowen analysts. However, “the moves signal a more cautious stance in the longer term,” the Journal reported.