TLDR:
- Nvidia shares jumped 2.9% after hours following news of semiconductor tariff exemptions
- Commerce Secretary announced separate tariffs targeting chip sector expected in coming months
- Stock remains 25% below January peak but has recovered from deeper 38% early April decline
- Nvidia maintains dominant 90%+ share in AI GPU market despite competitive pressures
- CEO Jensen Huang plans to increase US-based manufacturing to mitigate future tariff impacts
Nvidia shares climbed early Monday as investors responded positively to news that semiconductors would receive a temporary exemption from recent tariff increases. The stock gained 2.9% in after-hours trading, reaching $110.71.
This follows Friday’s 3.1% increase during regular trading hours. The back-to-back gains reflect changing investor sentiment as tariff policies evolve.
The chip giant’s stock movements continue to track closely with broader market reactions to tariff announcements. Recent policy clarifications have created both opportunities and concerns for semiconductor investors.
On Friday, Customs and Border Protection released a notice exempting several electronics categories from tariffs. These included smartphones, laptops, integrated circuits, transistors, and semiconductor manufacturing equipment.
The market’s initial enthusiasm was dampened Sunday when Commerce Secretary Howard Lutnick stated that these products would face separate tariffs in the near future. This created renewed uncertainty for chip stocks.
Tariff Tensions Escalate
President Donald Trump added to the conversation Sunday with a post on Truth Social: “We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations.”
The tariff situation has created a complex landscape for chipmakers. In April 2025, the US government announced plans for a 32% tariff on Taiwanese imports and 34% on Chinese imports.
This triggered retaliatory measures from China, which imposed 84% tariffs on US goods. The US then responded by increasing tariffs on Chinese imports to 104%.
While semiconductors have received temporary exemption from these measures, Jefferies analysts warn that chips could be targeted in future tariff rounds. This possibility has kept investors cautious despite the recent rallies.
Nvidia faces particular exposure due to its manufacturing relationship with Taiwan Semiconductor Manufacturing. Any disruption to this supply chain could impact production capacity.
Chinese Market Challenges
The company also faces challenges in China, which represents about 13% of its fiscal 2025 revenue. New Chinese energy-efficiency guidelines for data centers may create headwinds for Nvidia products.
The company’s H20 chip reportedly doesn’t meet these new requirements, potentially limiting its appeal in Chinese data center expansions. This regulatory hurdle adds another layer of complexity to Nvidia’s international business.
Despite these challenges, CEO Jensen Huang has projected confidence. At Nvidia’s annual GTC conference, he told financial analysts that tariffs wouldn’t significantly impact the company’s outlook.
Huang also mentioned plans to gradually shift more manufacturing to the United States. This strategy could help insulate the company from future international trade disputes.
Technology Leadership Continues
Nvidia maintains its position as the dominant force in AI computing with over 90% market share in AI GPUs. This technological advantage provides a buffer against some market pressures.
The company recently unveiled its Blackwell architecture systems, designed specifically for inference workloads. These new chips deliver 25 times higher token throughput and 20 times lower costs compared to previous Hopper 100 chips.
Beyond hardware advantages, Nvidia has cultivated a robust software ecosystem. Over 5.9 million developers use its Compute Unified Device Architecture (CUDA) and other software platforms.
This software advantage creates high switching costs for customers, helping Nvidia maintain a loyal user base even during periods of market volatility. The company has also introduced new software offerings like Nvidia AI Enterprise and Nvidia Inference Microservices.
These tools help enterprises deploy AI solutions more effectively, further cementing Nvidia’s position in the AI infrastructure market. This integrated approach to hardware and software has been a key differentiator for the company.
Historical Resilience
Investors watching Nvidia’s current price movement might find comfort in the company’s history of rebounds. The stock has demonstrated strong recovery patterns after previous declines.
In 2018, Nvidia shares fell over 53% from October to December due to the crypto market crash and a global tech selloff. However, the stock recovered 65% the following year once inventory levels normalized.
During the early stages of the COVID-19 pandemic, Nvidia stock dropped 30% from February to March 2020. By March 2021, it had surged more than 100% as demand for gaming and data center services skyrocketed.
An even more dramatic example occurred between November 2021 and October 2022, when the stock fell 66% amid interest rate concerns. By October 2023, it had rebounded 200%, driven by exploding demand in AI markets.
Current valuation metrics suggest the stock may be attractively priced relative to historical levels. Nvidia trades at 24.45 times forward earnings, well below its five-year average of 71.54.
Other chip manufacturers also showed positive momentum in Monday’s premarket trading. Advanced Micro Devices gained 2.7%, while Broadcom rose 1.9%.
The recent 90-day pause on higher “reciprocal tariffs” announced by President Trump has provided temporary relief across the technology sector. Instead, a “lowered reciprocal tariff of 10%” has been implemented during this period.
This policy shift has been welcomed by Wall Street, though questions remain about long-term tariff strategies and their impact on the semiconductor industry. The coming months will likely bring additional policy developments affecting this sector.
