NVIDIA Corporation (NVDA) is facing significant market turbulence following President Donald Trump’s recent tariff announcements, which have sent its stock tumbling. On Thursday, April 3, 2025, NVIDIA shares dropped 7.8%, marking a substantial decline that has left the stock at its lowest levels since the previous summer. This downturn is compounded by China’s retaliatory measures, including a new 34% tax on all U.S. goods set to take effect on April 10, 2025.
As the market opened on Friday, April 4, NVIDIA shares fell another 3.6% in premarket trading, bringing the price down to $98.19. This continued decline reflects broader concerns about the impact of tariffs on the global tech supply chain, particularly for semiconductor manufacturers like NVIDIA, whose products are critical to artificial intelligence infrastructure.
Despite the market's negative sentiment, retail investors seized the opportunity to buy the dip, injecting $913 million into NVIDIA on Thursday alone. This influx of capital represents a remarkable display of confidence from smaller investors, even as institutional investors remain cautious amid the ongoing trade tensions. J.P. Morgan analysts noted, “Despite a sea of red, retail investors stood firm and not only bought the dip but did so at a historic pace.”
However, the volatility surrounding NVIDIA has drawn scrutiny from market analysts. CNBC’s Jim Cramer described NVIDIA as now trading like a “meme stock,” highlighting the heightened volatility and speculative nature of its current trading environment. Cramer stated, “Can we just tell it like it is? It’s a meme — that’s why it’s getting crushed.” His remarks underscore growing concerns among investors about valuation amid the shifting economic landscape.
Adding to the complexity, the semiconductor sector faced a broad selloff, with other major players like Advanced Micro Devices (AMD) and Broadcom (AVGO) also experiencing significant declines, down 5.8% and 6% respectively in premarket trading. This suggests that investor sentiment is reassessing the entire sector in light of escalating trade tensions.
In a note to investors, Truist analyst William Stein suggested that NVIDIA might have some protection from the tariff impacts due to its essential role in the development of artificial intelligence. Stein remarked, “Their AI customers appear to be in a race to develop AI and specifically Artificial General Intelligence (AGI) at perhaps any cost.” This perspective provides a glimmer of hope for NVIDIA amidst the uncertainty.
Historically, NVIDIA has been a leader in the GPU market, and its long-term growth prospects remain bullish. The company is expected to grow its earnings per share (EPS) at a compound annual growth rate (CAGR) of 35.4% over the next three to five years. However, the current environment poses challenges, as approximately 13% of NVIDIA’s revenue is derived from China, making it particularly vulnerable to U.S.-China relations and the tariffs imposed by the Trump administration.
Moreover, NVIDIA’s dependence on Taiwan Semiconductor Manufacturing Company (TSMC) for production adds another layer of risk. While Taiwan’s chip industry was exempted from the latest round of U.S. tariffs, any disruptions in this relationship could lead to significant supply chain issues for NVIDIA.
As analysts weigh the future of NVIDIA, the sentiment is mixed. While 39 out of 42 analysts covering the stock remain bullish, there are concerns about the sustainability of NVIDIA’s growth given the current economic climate. The average price target for NVIDIA is set at $176.54 per share, indicating a potential upside of 73% from its current trading levels.
In light of these developments, some investors are reevaluating their positions. The stock’s 200-day moving average is currently at $127.38, suggesting that now may not be the ideal time to initiate long positions. For those who have held NVIDIA shares, it might be prudent to consider trimming positions and taking profits while waiting for a more favorable entry point.
Furthermore, NVIDIA is reportedly in advanced talks to acquire Lepton AI, a startup focused on renting out servers powered by NVIDIA’s chips. While this acquisition could diversify NVIDIA’s offerings, it has raised concerns among investors. Notably, renowned short seller Jim Chanos flagged this potential deal, suggesting that buying out resellers can indicate deeper issues within the company. Chanos remarked, “Trying to buyout your resellers is usually a huge red flag.”
Despite the challenges, NVIDIA continues to report impressive financial results. The company recently announced fourth-quarter revenues of $39.3 billion, reflecting a staggering 78% year-over-year increase, with projections of $43 billion for the first quarter of fiscal 2026. Analysts expect NVIDIA’s revenue to soar to $310 billion by 2030, further solidifying its position as a leader in the AI chip market.
As the market navigates these tumultuous waters, investors are left pondering whether NVIDIA is a buy, hold, or sell. For those willing to endure short-term volatility, NVIDIA’s long-term growth prospects remain enticing. However, for more risk-averse investors, the current climate may warrant caution.
Ultimately, the unfolding trade war and its implications for NVIDIA’s operations will be crucial in determining the stock’s trajectory in the coming months. As the situation develops, investors will need to stay informed and agile to navigate the complexities of the semiconductor market amid rising geopolitical tensions.
