TLDR:
- NVIDIA stock fell 1.7% to $100.94 in premarket trading after rising 3.9% the previous day
- Trade tensions between U.S. and China continue to affect NVIDIA, with export restrictions still in place
- Mizuho Securities analyst maintains Outperform rating with $168 target price
- Amazon Web Services executive confirmed no slowdown in AI infrastructure spending
- NVIDIA faces estimated $5.5 billion charge from halted China exports
NVIDIA’s stock has been on a rollercoaster ride this week as investors closely monitor U.S.-China trade tensions and signals about artificial intelligence (AI) infrastructure demand. The chip giant’s shares dropped 1.7% to $100.94 in premarket trading on Thursday, following a 3.9% gain on Wednesday.
The recent volatility comes as President Donald Trump signaled that U.S.-imposed tariffs of 145% on imported goods from China are expected to eventually decrease. While this doesn’t directly benefit NVIDIA, which still faces restrictions on exports to China, it could ease fears about specific taxes on imported semiconductors.
NVIDIA has taken a hit this year, with shares down 26% since January despite soaring 800% over the previous two years. This decline stems partly from U.S. government restrictions requiring NVIDIA to obtain a license for selling chips to China.
Export Restrictions Impact
The export restrictions mean NVIDIA cannot fulfill current orders to Chinese customers. The company expects to take a $5.5 billion charge as a result of these limitations.
These challenges come during an already tense period regarding potential import tariffs. President Trump exempted electronics from tariffs but indicated this exemption would only be temporary.
Investors worry that Trump’s plans to tax imports could increase NVIDIA’s costs since the company produces most of its top-selling AI chips in Taiwan. Such tariffs could also hurt NVIDIA’s customers, potentially causing them to reduce AI spending.
Despite these obstacles, Mizuho Securities analyst Vijay Rakesh remains optimistic. “We continue to see NVIDIA as the leader in merchant silicon for AI despite some recent headwinds around H20 [China chip] restrictions,” Rakesh wrote in a research note.
Rakesh maintained an Outperform rating and $168 target price on NVIDIA stock, suggesting strong upside potential from current levels.
AI Demand Signals
On the positive side, there are encouraging signs for AI infrastructure demand. Data-center cooling equipment company Vertiv Holdings raised its 2025 sales forecast in its earnings report on Wednesday, suggesting continued growth in data center build-outs needed for AI applications.
Other chip makers also saw gains, with Advanced Micro Devices up 1.3% and Broadcom up 1.9% in premarket trading.
An earlier analyst report suggesting an Amazon Web Services (AWS) slowdown in AI spending had briefly dragged down NVIDIA shares. However, AWS vice president of global data centers Kevin Miller quickly addressed these concerns.
In a LinkedIn post, Miller clarified: “This is routine capacity management, and there haven’t been any recent fundamental changes in our expansion plans.” He added that AWS continues to see “strong demand” for generative AI and foundational workloads.
Long-Term Outlook
NVIDIA remains the world’s leading designer of AI chips, known as graphics processing units (GPUs). These chips, along with related products and services, have helped NVIDIA build what CEO Jensen Huang calls the “on ramp” to AI.
This positioning has driven exceptional growth, with NVIDIA reporting a 114% revenue increase to $130 billion in its latest full year. The data center business, which serves AI customers, accounted for 88% of this revenue.
Major tech companies continue to prioritize AI investments. Meta Platforms plans to spend up to $65 billion to support AI growth this year, while Alphabet and Amazon have also emphasized their focus on AI investment.
Some analysts suggest that economic slowdowns might actually accelerate AI adoption as companies seek efficiency gains. The International Monetary Fund recently predicted U.S. growth will slow to 1.8% this year, down from 2.8% last year.
While NVIDIA may face short-term challenges from tariffs and export restrictions, demand for its products shows no signs of weakening. Tech companies continue to invest heavily in AI, and NVIDIA, as the industry leader, remains well-positioned to benefit over the long term.
