TLDR:
- Nvidia stock could be impacted by the outcome of the 2024 U.S. presidential election
- Trump proposes extending corporate tax cuts and implementing high tariffs on imports
- Nvidia’s manufacturing outside the U.S. could be affected by proposed tariffs
- Demand for Nvidia’s AI chips remains strong regardless of political leadership
- CEO Jensen Huang reports “insane” demand for new Blackwell AI processors
Nvidia, the leading AI chip manufacturer, finds itself at the intersection of technological innovation and political uncertainty as the 2024 U.S. presidential election approaches. The company’s future performance could be influenced by the outcome, with potential impacts on corporate taxes, international trade, and AI regulations.
Former President Donald Trump, the Republican nominee, has proposed several policies that could affect Nvidia’s operations. These include extending corporate tax cuts implemented during his first term and potentially reducing the corporate tax rate further to 15%.
While this could boost Nvidia’s earnings, the impact may be limited as the company’s effective tax rate in recent years has already been well below the proposed 15%.
Trump’s stance on international trade, particularly his proposal for steep tariffs on imports, presents a more significant challenge for Nvidia.
The company relies heavily on manufacturing outside the U.S., including in China. A proposed 60% tariff on Chinese imports and up to 20% on imports from other countries could increase Nvidia’s production costs. The company would likely attempt to pass these costs on to customers, potentially affecting demand.
The Republican platform also calls for repealing President Biden’s Executive Order on AI safety and security. This move could potentially benefit Nvidia by encouraging more investment in artificial general intelligence (AGI) development, an area that has raised safety concerns under current regulations.
Despite these potential policy shifts, Nvidia’s core business continues to thrive. CEO Jensen Huang recently reported “insane” demand for the company’s new Blackwell AI processors, set to launch in the fourth quarter of 2024. These chips promise 2.5 times the performance of their predecessors, the Hopper series.
Nvidia’s stock performance has been strong under both Democratic and Republican administrations. During Trump’s first term, the stock jumped more than 5 times in value. Under President Biden, it has increased nearly 9 times. This suggests that while government policies can impact the company, the primary driver of Nvidia’s success remains the increasing demand for its AI chips.
The Blackwell chips, unveiled in March 2024, are positioned as “processors for the generative AI era.” Their impending release has generated significant interest across the tech industry, with Huang noting that “everybody wants to be the first to get their hands on it.”
Nvidia’s stock has shown resilience in the face of political changes, rising 1.6% to close at 118.85 in recent trading. This suggests that investors remain confident in the company’s long-term prospects, regardless of potential shifts in the political landscape.
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