Nvidia Falls Further Below Key Level On Trump Tariffs; Is Nvidia A Buy Or Sell Now?

Nvidia (NASDAQ: NVDA) shares have been on a rollercoaster ride since the election of President Donald Trump, with the stock falling further below key levels amid concerns over the impact of Trump's tariff policies on the company's supply chain and production costs. As of February 3, 2025, NVDA stock is trading at $117.48, down 2.16% from its latest closing price of $120.07 and 3.67% from its Friday session close of $124.04. The stock has been volatile in recent weeks, with investors grappling with the potential implications of Trump's tariff policies on the semiconductor industry.



Nvidia's reliance on Taiwan Semiconductor Manufacturing (TSMC) for chip production and the importance of rare earth minerals in semiconductor production make the company particularly vulnerable to Trump's tariff policies. TSMC is based in Taiwan, which is not a U.S. ally or adversary, but its geopolitical status is ambiguous. If Trump's tariffs extend to Taiwan, Nvidia's production costs could increase significantly, as TSMC is the world's largest chipmaker and produces over half of the world's chips. Additionally, many of the raw materials needed for semiconductor production, such as rare earth minerals, are overwhelmingly produced and processed in China. If Trump's tariffs on China remain in place or increase, the cost of these materials could rise, further increasing Nvidia's production costs.

Despite these challenges, Nvidia remains a dominant player in the GPU market, with a wide moat created by its CUDA software platform. The company's GPUs are the backbone of artificial intelligence (AI) infrastructure, and the company is well-positioned to benefit from the continued growth of AI and machine learning. Moreover, Nvidia's forward P/E ratio is 26.33, which is lower than its current P/E ratio, indicating that the market expects the company's earnings to grow in the future. This is supported by the company's strong financial performance and the increasing demand for AI infrastructure.

However, the long-term impact of Trump's tariff policies on Nvidia's supply chain and production costs is uncertain, and the company's competitors may respond to the tariffs in various ways, potentially affecting Nvidia's market share. Investors should closely monitor the situation and consider various factors when making investment decisions.

In conclusion, while Nvidia's recent price decline and the potential impact of Trump's tariff policies on the company's supply chain and production costs are concerning, the company's strong fundamentals, dominant market share, and growth prospects make it an attractive investment opportunity. However, investors should remain cautious and closely monitor the situation as it unfolds.