Nvidia shares fell nearly 9% on Monday after U.S. President Donald Trump reaffirmed a 25% tariff on Canadian and Mexican imports. That coincided with a broader stock market decline, with the Dow Jones Industrial Average, which includes Nvidia, losing 1.8% and the Nasdaq Composite falling more than 3%. Nvidia’s market capitalization fell by $265 billion to $2.79 trillion, sending the stock back to its September level.
Image source: NVIDIA
The decline in stock prices comes just days after Nvidia’s quarterly earnings report beat analysts’ expectations. On Wednesday, the company announced a 78% year-over-year increase in revenue to $39.33 billion. However, despite the impressive financial results, Nvidia’s stock has lost more than 13% since the report was published. This is due to investor concerns about the impact of new tariffs on logistics, production costs, and the tech giant’s future financial performance.
Nvidia’s core manufacturing is in Taiwan, but complex computing systems are assembled and integrated in the United States and Mexico. The 25% tariffs that go into effect today could significantly increase the company’s costs. This creates uncertainty about the future margins and competitiveness of its products, even as demand for AI chips continues to grow rapidly.
During the quarterly earnings call, analysts asked Nvidia management about the potential impact of the new tariffs. The company’s CFO Colette Kress commented: “The tariffs are unknown at this point, until we understand what the U.S. government’s plan is.” This is a concern for investors, as the additional costs could impact Nvidia’s supply chain strategy and partnerships.
The company is under additional pressure from regulators over Nvidia’s exports to Singapore. Some analysts believe the country could be used as a transit point for chips bound for China, potentially bypassing U.S. export restrictions. Singapore authorities recently arrested several people accused of misrepresenting the final destinations of U.S.-made servers, raising concerns that U.S. regulators could tighten controls on high-tech exports, creating additional risks for Nvidia’s business.
To reduce its reliance on overseas supplies, Nvidia has announced it will localize some of its manufacturing in the U.S. Trump said Monday that the company plans to make chips at new TSMC facilities as part of a $100 billion expansion. The move should help Nvidia adapt to changing trade conditions, but it will take time to implement.
Amid the volatility, investors are keeping a close eye on Nvidia’s growth prospects in AI. The company’s largest cloud providers remain key customers, accounting for about 50% of its data center revenue. During the quarterly report, analysts were expecting Nvidia to comment on demand dynamics, potential supply disruptions, and future growth prospects.
Nvidia CEO Jensen Huang confirmed that the company has fixed the problems associated with its latest Blackwell architecture and expressed confidence in further demand growth: “We’re going to have a good quarter next quarter. We also have a pretty solid backlog of orders for Blackwell.” The statement calmed investors somewhat, but market volatility continues to weigh on the stock.