Nvidia Faces Mixed Signals on Tariffs

Nvidia Faces Mixed Signals on Tariffs

Nvidia has become a major player in the generative AI boom, with its chips and software powering AI for companies like Microsoft, Google, Meta, OpenAI, and Tesla. As President Trump plans to impose tariffs on semiconductors, Nvidia CEO Jensen Huang is working to minimize the impact of these tariffs on his company. However, his efforts have exposed the mixed signals coming from the Trump administration on AI policy.

After attending a $1 million-per-head dinner at Mar-a-Lago, Huang seemed to secure a temporary reprieve for Nvidia’s H20 chips, which were initially slated for export restrictions to China. However, by the following day, Nvidia announced a $5.5 billion quarterly charge due to export controls, causing a 5% drop in its stock price. This confusion is further compounded by conflicting messages from White House officials, including Michael Kratsios, who emphasized the need to curb China’s AI advancements.

Despite Nvidia’s commitment to investing $500 billion in U.S. AI data centers, regulatory challenges in Texas and unclear AI policy make the future uncertain. Patrick Moorhead of Moor Insights & Strategy noted the lack of consistency in the administration's approach, leaving Huang to navigate this complicated geopolitical and business landscape.

ASML Misses Orders, Cites Tariff Uncertainty

ASML, the Dutch semiconductor equipment giant, missed first-quarter order expectations and warned that uncertainty from new U.S. trade restrictions could impact demand for its chipmaking machines. The company reported net bookings of 3.94 billion euros ($4.47 billion) for the first three months of 2025, lower than the analyst forecast of 4.89 billion euros. ASML's shares dropped by 6% on Wednesday morning.

Despite this, the company reported net sales of 7.74 billion euros and net profit of 2.36 billion euros, which were slightly above expectations. ASML CEO Christophe Fouquet remained optimistic about the strong demand outlook, particularly driven by artificial intelligence. However, he noted that ongoing uncertainty with some customers could push the company to the lower end of its 2025 revenue guidance, which ranges from 30 billion to 35 billion euros.

Fouquet highlighted that U.S. tariffs are creating new uncertainty in both macroeconomic conditions and market demand. Analysts, including Ben Barringer from Quilter Cheviot, believe it's too early to assess the full impact of these tariffs. Meanwhile, global chip stocks have been volatile amid concerns about U.S. trade measures, with Nvidia warning of a $5.5 billion charge from export restrictions.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.