Nvidia shares fell nearly 9% on Monday as President Donald Trump confirmed that tariffs from Canada and Mexico will take effect on Tuesday. The company’s decline contributed to a broader market downturn, with the Dow dropping 800 points (1.8%) and the Nasdaq Composite sliding more than 3%.
Nvidia’s stock price fell 8.7%, erasing nearly six months of gains since it closed at $108.10 on September 10, 2024, according to Dow Jones Market Data. Other AI-themed stocks also experienced steep declines. Super Micro Computer Inc. shares dropped 13%, while Astera Labs Inc. shares fell 9%. Arm Holdings PLC, Broadcom Inc., and Marvell Technology Inc. shares decreased by 8%, 6%, and 6.5%, respectively.
Nvidia shares plunge nearly 9% amid tariff concerns
According to MarketWatch, Jordan Klein, a Mizuho desk-based analyst, observed that the unraveling of the AI trade is a continuation of trends seen in the previous week. Concerns specific to Nvidia include fears of new tariffs from China and stricter export restrictions that could inhibit sales in the country. We reported that Singapore officials are investigating whether servers shipped to Malaysia contained Nvidia products banned from sale in China, which may have ended up in other destinations.
Klein noted that a significant risk is that the U.S. government may act to ban all Nvidia chips from being sold in China. A report from The Wall Street Journal highlighted that Nvidia’s latest Blackwell chips are reaching China through third-party resellers, violating export controls. Singapore’s investigation also involves customers of Nvidia, Dell, and Super Micro, examining potential violations concerning the shipment of servers that may contain Nvidia chips from Singapore to Malaysia, suspected as a route for chip smuggling to China.
Nvidia’s stock has seen a sharp decline of more than 12% over the past five days, trading just above its 2025 low of approximately $117, following a downturn fueled by a cheap Chinese AI model from DeepSeek that impacted U.S. Big Tech stocks.
An Nvidia spokesperson stated, “Anonymous traders cannot acquire, deliver, install, use, and maintain Blackwell products in unauthorized countries,” affirming the company’s commitment to investigating reports of possible diversion.
Nvidia utilizes Arm’s architecture for its Grace CPUs, employed alongside its Blackwell GPUs in its AI server systems produced by Dell and Super Micro. Concerns regarding further restrictions on sales to China are also prominent among investors. Gil Luria, an analyst at DA Davidson, indicated the company’s current stance is that it isn’t accountable for its resellers’ actions but questioned whether this would stand as restrictions evolve.
Nvidia’s recent earnings report revealed that its Blackwell AI server designs contributed $11 billion to fourth quarter revenue, reaching full-scale production despite previous reports of glitches and overheating issues. CFO Colette Kress reported that data center sales in China remain considerably below levels seen before export controls were enacted by the Biden administration in 2022, stating, “Absent any change in regulations, we believe that China shipments will remain roughly at the current percentage.”
Trump is reportedly examining further restrictions on Nvidia exports to China, potentially including the expanded regulation of Nvidia’s H20 chips, a version of its Hopper GPUs made for compliance with U.S. trade rules. Nvidia began creating specialized versions of its GPUs for China in 2022 as part of efforts to align with U.S. trade regulations.
On the same day, a report indicated that Nvidia and Broadcom are testing Intel’s latest chip manufacturing process, which has faced numerous setbacks. Nvidia’s stock is currently valued at approximately $2.79 trillion, having lost $265 billion in market capitalization post-decline, and is trading at levels similar to those prior to the U.S. presidential election.
Nvidia has experienced a 13% drop since its earnings report that exceeded analysts’ expectations, with a 78% revenue increase year-over-year to $39.33 billion. Kress stated regarding the tariffs, “Tariffs at this point, it’s an unknown until we understand further what the U.S. government’s plan is.”
Although Nvidia’s chips are primarily manufactured in Taiwan, systems and computers that include these chips are produced in Mexico and the U.S., which could be subject to Trump’s 25% tariffs that take effect on Tuesday.
Nvidia is also facing scrutiny regarding its exports to Singapore, perceived as a transit point for shipping chips to China in violation of export controls, highlighted by recent detentions in Singapore of individuals misrepresenting server destinations. Despite these challenges, Nvidia aims to proceed with a $100 billion expansion of its manufacturing facilities in the U.S., as announced by Trump.
During discussions last week regarding Nvidia’s potential for continued AI growth among major cloud companies, which constitute about half of its data center revenue, CEO Jensen Huang expressed optimism, saying, “We’re going to have a good quarter next quarter.” Furthermore, Huang noted a solid pipeline of demand for Blackwell products.
Following these developments, Broadcom shares fell approximately 6%, while Dell stock dropped nearly 7%. Super Micro’s shares experienced a 13% decrease for the day, compounding its nearly 30% loss from the previous week. Shares of Arm also declined by around 8%. Nvidia has lost approximately $708 billion in market capitalization due to instability within the chip sector, but company executives assert they stand to gain from increasing inferencing demand fueled by “reasoning AI.” In total, Nvidia is down about $900 billion from its peak market cap of $3.66 trillion, reached on January 6, 2024.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial or investment advice. Please consult with a qualified financial advisor before making any investment decisions.
Featured image credit: Kerem Gülen/Ideogram
