TLDR:
- Nvidia stock rose 2.9% in after-hours trading following temporary semiconductor tariff exemptions
- Trump administration plans separate tariffs for semiconductors in coming months
- Nvidia shares are down 25% from January 2025 high, recovering from 38% drop in early April
- CEO Jensen Huang claims Nvidia could be insulated from tariffs and recession
- The company maintains over 90% share in AI GPU market with significant technological edge
Nvidia stock gained momentum early Monday as investors reacted to news of a temporary exemption for semiconductors from tariffs. However, this relief might be short-lived as Commerce Secretary Howard Lutnick clarified that these goods would face separate tariffs in the coming months.
Nvidia shares increased 2.9% in after-hours trading to $110.71. This follows a 3.1% rise during Friday’s regular session.
The chipmaker’s stock continues to be influenced by broader market sentiment around tariffs. Uncertainty remains about how these measures will specifically impact the semiconductor sector.
On Friday, Customs and Border Protection announced that several electronic products, including integrated circuits and semiconductor storage devices, would be exempt from certain tariffs. This news initially boosted investor confidence.
The optimism was tempered on Sunday when President Donald Trump posted on Truth Social: “We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations.”
Trade War Concerns
The tariff situation has created volatility for Nvidia and other chip stocks. In April 2025, the U.S. government announced plans to levy a 32% tariff on imports from Taiwan and a 34% tariff from China.
China responded with 84% retaliatory tariffs on U.S. imports. This prompted the U.S. to increase tariffs on Chinese imports to 104%.
While semiconductors have been temporarily excluded from these measures, analysts from Jefferies warn about possible sector-specific tariffs in subsequent rounds. This could lead to supply chain disruptions for Nvidia.
The company depends heavily on Taiwan Semiconductor Manufacturing for chip production. Any disruption to this relationship could affect Nvidia’s manufacturing capabilities.
Nvidia’s Chinese business, which accounts for approximately 13% of its fiscal 2025 revenue, may also face challenges. China’s new energy-efficiency guidelines for data centers could impact sales of Nvidia’s H20 chip.
Market Position Remains Strong
Despite these challenges, Nvidia maintains a dominant position in AI computing with over 90% share in the AI GPU market. This technological edge offers some protection against market turbulence.
Nvidia CEO Jensen Huang has expressed confidence in the company’s resilience. At Nvidia’s annual GTC conference, Huang told financial analysts he wasn’t expecting a major impact from tariffs.
Huang also indicated that Nvidia would gradually increase its manufacturing presence in the United States. This strategy could help mitigate future tariff risks.
The company recently launched its Blackwell architecture systems, specifically designed for inference workloads. These chips demonstrate 25 times higher token throughput and 20 times lower cost than previous Hopper 100 chips.
Nvidia has built a robust software ecosystem with over 5.9 million developers using its platforms. This creates high switching costs for customers and helps maintain a loyal user base.
Historical Recovery Patterns
Nvidia stock is down nearly 25% from its January 2025 high. However, this represents an improvement from the almost 38% drawdown seen in early April.
The company has a history of rebounding after significant declines. In 2018, Nvidia stock crashed over 53% due to the crypto market collapse, but recovered 65% the following year.
During the COVID-19 pandemic, the stock initially fell 30% in March 2020 before surging over 100% by March 2021. From November 2021 to October 2022, shares dropped 66% amid interest rate concerns, then recovered 200% by October 2023.
Currently trading at 24.45 times forward earnings, Nvidia’s valuation is well below its five-year average of 71.54 times. This suggests that many risks are already priced into the stock.
Other chip manufacturers also showed positive movement in Monday’s premarket trading. Advanced Micro Devices rose 2.7%, while Broadcom gained 1.9%.
President Trump’s recent announcement of a 90-day pause on higher “reciprocal tariffs” and implementation of a “lowered reciprocal tariff of 10%” has provided some temporary relief for technology stocks.
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