The U.S. economy and global markets are once again experiencing turbulence following President Donald Trump’s announcement on April 2 of “reciprocal tariffs” of at least 10% for many countries.
The S&P 500 index lost 10% in the two days following the tariff announcement, while the tech-heavy Nasdaq composite tumbled 11%.
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The steep tariffs could weigh heavily on U.S. consumers and enterprises as products imported could cost more.
“We view this as kind of a growth shock… this is going to be a hit to U.S. consumers,” Ashish Shah, Goldman Sachs’s chief investment officer of public investing, said on April 3.
While the White House said semiconductors are excluded from tariffs, the disruption could still ripple through downstream electronics manufacturing and could impact demand for semiconductors.
On April 3, 2025, the Philadelphia Semiconductor Index plummeted nearly 10%, outpacing the broader S&P 500 Index’s 5% drop. It fell another 7.6% on April 4.
Nvidia, often viewed as the bellwether for AI-driven chip demand, has not been spared. The stock lost more than 14% across the two sessions.
Analysts at HSBC downgraded Nvidia’s stock following the latest tariffs, citing limited GPU pricing power going forward and increasing mismatches in the supply chain. It wasn’t the only Wall Street firm to weigh in.
Bank of America also updated its Nvidia stock forecast.
Nvidia stock closed at $94.31 on April 4 and is down roughly 30% year-to-date.
PATRICK T. FALLON/Getty Images
Nvidia’s pre-tariff struggles
Even before the tariff announcement, Nvidia (NVDA) had been wrestling with headwinds.
The chipmaker, long a darling of Wall Street for its dominance in artificial intelligence, saw its stock sink nearly 20% in Q1 2025, weighed down by the rollout of China’s cheap AI model, DeepSeek, disappointing earnings, and a broader tech sell-off caused by economic uncertainties.
Nvidia’s revenue growth, once soaring at triple-digit rates, slowed to 78% year-over-year in the fourth quarter of 2024—still solid but a comedown for investors who had hoped for more.
Meanwhile, despite Nvidia CEO Jensen Huang highlighting many times that the demand for Blackwell is “extraordinary,” keeping up with that demand has started to pressure the company’s profit margins.
The company reported a non-GAAP 73.5% gross margin for Q4, which was 3.2 points shy of a year earlier. It attributed the smaller profit margin to newer, more complicated, and costly data center products, including Blackwell.
Nvidia’s supply chain is mainly concentrated in the Asia-Pacific region. Its chip production highly depends on foundries such as Taiwan Semiconductor Manufacturing Company (TSM) .
Nevertheless, Huang has suggested that he wasn’t expecting tariffs to impact the company’s outlook significantly and that Nvidia would eventually bring more manufacturing onshore.
“Tariffs will have a little impact for us short term,” he said.
Bank of America bets bold on Nvidia
Despite these challenges, Bank of America remains Nvidia’s staunch defender.
Analysts led by Vivek Arya named Nvidia, alongside Broadcom (AVGO) , Lam Research (LRCX) , and Cadence Design Systems (CDNS) , as the firm’s top semiconductor picks after Trump announced tariffs. The analyst said these companies have the best scale, profit margins and balance sheets.
Arya said no company is immune from the impact of tariffs, but those with solid balance sheets and strong fundamental exposure in AI, cloud, and complex computing are likely to hold up better over the medium to long term.
He added that AI spending should stay relatively healthy among major U.S. cloud providers (like Meta (META) and Microsoft (MSFT) ) who can afford to pay more for mission-critical Al deployments.
Bank of America also noted that firms with U.S.-based manufacturing assets, including Texas Instruments (TXN) , Intel INTC, GlobalFoundries (GFS) , and Wolfspeed (WOLF) , may benefit from shifting supply chains. Companies with pricing power, such as Nvidia and Arm (ARM) , are also likely to remain more resilient amid economic volatility.
More Nvidia:
Nvidia stock closed at $94.31 on April 4 and is down roughly 30% year-to-date. Bank of America suggested a buying in another report on March 26 as the valuation is “still compelling.”
“We believe the stock is providing a particularly attractive opportunity for one of the most unique, high-quality tech franchises leading the largest and fastest growing secular trends,” Arya wrote.
