Shares of semiconductor giant Nvidia (NASDAQ: NVDA) surged 18.7% on April 9, after President Trump announced a 90-day pause on the higher “reciprocal tariffs.” Instead, he has authorized a “lowered reciprocal tariff of 10%” — in line with the 10% baseline tariff set on all imports.
Investors had long been worried about the U.S. government’s decision to impose import tariffs on products from various trading partners. Since this can lead to rising costs, disruptions in the supply chain, and retaliatory tariffs on American goods, many U.S. stocks saw a dramatic decline in early April 2025. The temporary pause in reciprocal tariffs seems well received by Wall Street.
Nvidia’s stock is down nearly 25% from its recent high in January 2025. Although this is not a very encouraging sign, it is a solid improvement from the almost 38% drawdown from the high on April 4.
So, does valuation correction present an opportunity for investors to buy, hold, or sell Nvidia stock now? Let’s find out.
Regulatory risks have emerged as a primary headwind for Nvidia. In April 2025, the U.S. government announced its decision to levy a hefty 32% tariff on imports from Taiwan and a 34% tariff from China. China responded by levying 84% retaliatory tariffs on imports from the U.S. In retaliation, the U.S. government has increased tariffs on Chinese imports to 104%.
Although semiconductors have been excluded from this round of tariffs, there are signals of a potential escalation of trade wars between the U.S. and China.
Jefferies analysts fear the possibility of additional sector-specific tariffs, including semiconductors, in subsequent tariff rounds. If true, it can lead to significant supply chain disruptions and margin pressures for Nvidia, considering that the company depends heavily on Taiwan Semiconductor Manufacturing’s fabs for chip manufacturing.
The U.S. government has long been mulling stricter controls on chip sales to China. The Chinese government’s recently introduced energy-efficiency guidelines, also urge companies to use chips adhering to strict requirements in new data centers or expansions. Since Nvidia’s best-selling H20 chip does not fulfil these requirements, it may hurt the company’s Chinese business — accounting for almost 13% of its revenues in fiscal 2025 (ending Jan. 26).
Nvidia is also encountering competitive pressures, though other chip manufacturers are significantly behind in the artificial intelligence (AI) race. The company is also experiencing short-term gross margin pressures due to the ongoing ramp-up of its Blackwell systems.
