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Investors Business Daily
Investors Business Daily
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VIDYA RAMAKRISHNAN

Nvidia Plunges On Trump Tariff News After Amazon Report; Is Nvidia A Sell Now?

Nvidia stock fell sharply before paring some losses amid the latest tariff news Friday.

Shares had rallied to their all-time high of 183.30 after trade talks between the U.S. and China resumed on Monday. Treasury Secretary Scott Bessent said Thursday there were "the makings of a deal" with China.

On Friday, however, President Donald Trump signed an executive order raising tariffs on Canadian goods to 35% from 25%, starting Aug. 7. Is Nvidia a sell now?

Elsewhere, MarketWatch said Thursday that the Cybersecurity Administration of China found that lawmakers in the U.S. had called for tracking and local capabilities for advanced chips. On Friday, Barron's reported that Nvidia denied the charge.

Nvidia Stock: China Chip Gets Go Ahead

Nvidia placed an order for 300,000 H20 chips with Taiwan Semiconductor, adding to an existing inventory of 600,000-700,000 chips, Reuters reported on Tuesday, citing unnamed sources. In 2024, Nvidia sold around 1 million H20 chips, the report said, citing research firm SemiAnalysis.

Nvidia recently said it had received assurances from Trump's administration that it would grant the chip leader licenses to sell its H20 artificial intelligence chip in China

Meanwhile, to bolster U.S. artificial intelligence infrastructure, Trump unveiled an AI Action Plan.

Big Techs' Huge Spending Plans

Spending plans from Magnificent Seven leader Amazon didn't lift Nvidia stock on Friday. The e-commerce behemoth said it would spend around $60 billion in the second half of 2025. A significant part of that spend will be on Nvidia chips.

On Wednesday, Meta announced midpoint spending plans of $68 billion for the full year, in part to "meet the needs of our artificial intelligence efforts" while Microsoft said its expects to spend more than $30 billion in the current quarter, CNBC reported.

Earlier, Alphabet raised its 2025 spending guidance to $85 billion from $75 billion.

A $4 Trillion Market Cap

Shares of Nvidia had pushed to record highs, fueled in part by chipmaker Taiwan Semiconductor reporting strong results and raising its full-year outlook.

Nvidia has also become the first company to hit a $4 trillion market cap, overtaking tech titans Apple and Microsoft.

Some caution from the chip industry did arrive with chip lithography gear maker ASML delivering an earnings beat while warning of tariffs hurting its outlook.

Analysts Upgrade Nvidia Stock

Several analysts anticipate higher valuations ahead, driven by Nvidia's unchallenged dominance in the artificial intelligence revolution.

On Wednesday, analysts at Morgan Stanley raised their price target on Nvidia stock to 200 from 170 while maintaining an overweight rating. Earlier, Loop Capital's Ananda Baruah has a $250 price target for the chipmaker, which would mean a market cap of $6 trillion.

Analysts at Citi raised their price target on the stock to 190 from 180 while maintaining a buy rating. They see sovereign artificial intelligence demand pushing the total addressable market for AI chips used in data centers past $500 billion by 2028.

Also, Mizuho hiked its price target for Nvidia to 185.

Vijay Rakesh, semiconductor analyst at Mizuho Securities, expects 5.3 million AI accelerator shipments this year and 6 million shipments in 2026. However, he also said, Nvidia's next-gen Rubin server, which it claims is 3.3 times faster than Blackwell Ultra, could drive even more sales, especially if Nvidia switches to air-cooled technologies.

Such a switch would help it tap a larger portion of the data center market, the analyst said. Rubin is designed to be liquid-cooled right now. Rakesh has an outperform rating for Nvidia stock.

June Rally

Shares of Nvidia jumped 17% in June, guiding the chipmaker to outpace Microsoft in market capitalization. The valuation race between the two tech titans had been close ever since Nvidia announced its first-quarter results on May 28.

Nvidia's stock price was aided by new initiatives, including an AI innovation event with partner CoreWeave .

Nvidia recently entered the IBD Leaderboard. It is also a holding on the IBD 50 list of growth stocks.

Nvidia Stock: Sovereign AI Push

The company made several moves in June to expand artificial intelligence technology centers in Europe, amid its developers conference in the region. Nvidia said it's partnering with Germany's Deutsche Telekom to create the first industrial AI cloud for European manufacturers.

Nvidia also announced deals with companies in the United Kingdom as the U.K. government seeks to bolster the country's AI capabilities.

The artificial intelligence chip titan has also been stepping up its partnership with the Saudi Arabian government to build AI infrastructure since May. The company has partnered with Humain, a subsidiary of Saudi Arabia's Public Investment Fund focused on AI.

Shares of Nvidia were pushed higher after Trump in June said on Truth Social that a trade deal between the U.S. and China was "done," subject to his final approval alongside that of Chinese President Xi Jinping. But the stock later pulled back amid an escalation in the conflict between Israel and Iran.

Meanwhile, analysts at Jefferies recently noted that capital expenditures by Chinese AI players Baidu, Alibaba, and Tencent were up 100% from the prior year.

Where Nvidia Earnings Stand

Nvidia in late May said first-quarter earnings per share of 81 cents rose 33% from the same quarter a year ago. Sales grew 69% to $44.1 billion. Analysts polled by FactSet had projected 88 cents in earnings per share on sales of $43.2 billion.

Nvidia stock declined following news that China's Huawei Technologies is testing a new artificial intelligence chip that could have higher capabilities than Nvidia's H100.

In terms of its 12-month price performance, Nvidia has outperformed 94% of all other stocks in Investor's Business Daily's database.

Funds own 40% of Nvidia's outstanding shares, according to IBD MarketSurge. Going by its Accumulation/Distribution Rating of B, it appears that funds are buying the stock. The rating measures price and volume action over the last 13 weeks.

The AI chip behemoth has a top-level Earnings Per Share Rating of 99. Further, the stock's all-around strength, or Composite Rating, sits at 99.

Is Nvidia Stock A Buy?

Looking at chart signals and technical measures can help investors assess whether Nvidia stock is a buy or sell now.

Despite Friday's fall Nvidia is well above a consolidation's buy zone that goes up to 160.79.

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