Chip Stocks Plummet After Trump Announces Tariff Plans on Steel and Semiconductors.

President Trump has announced plans to set tariffs on steel and semiconductors, causing a selloff in chip stocks. Nvidia and AMD have invested heavily in US facilities and plan to produce a significant portion of their AI infrastructure domestically. The tariff threat highlights the industry's shift towards onshoring production despite higher costs.

President Trump's recent announcement of tariffs on steel and semiconductors has sparked a selloff in chip stocks, prompting a shift in industry strategies. NVIDIA (NVDA) and AMD have responded by investing heavily in U.S. facilities to produce a significant portion of their AI infrastructure domestically. This move highlights the industry's trend towards onshoring production, despite higher costs.

NVIDIA, a global chipmaking giant, has announced a $500 billion investment in U.S.-based AI infrastructure over the next four years, aiming to manufacture AI supercomputers entirely in the U.S. for the first time [2]. This strategic move not only counters the potential impact of tariffs but also aligns with the company's broader focus on scaling AI model capabilities. NVIDIA's stock has shown resilience, rising by 34% over the last quarter, driven by key collaborations and strong earnings reports [1].

Similarly, AMD has been proactive in its response to the tariff threat. The company has invested in expanding its manufacturing and production facilities in the U.S., including plans to manufacture AI chips domestically. While the specifics of AMD's investments are not as detailed as NVIDIA's, the trend towards onshoring production is evident across the industry.

The shift towards domestic production is not without its challenges. Regulatory issues and export controls in China, for instance, pose significant considerations for companies seeking to penetrate and diversify their markets. However, the potential for enhanced operational efficiency and competitive edge may outweigh these risks.

Investors should monitor these developments closely. NVIDIA's stock, currently trading at $182.02, is slightly below the analyst consensus price target of $185.18, suggesting a fair valuation given the projected earnings and revenue enhancements [1]. As the company continues to advance in AI and enter new sectors like automotive, the potential for future growth appears robust, though always subject to market and industry risks.

References:
[1] https://simplywall.st/stocks/us/semiconductors/nasdaq-nvda/nvidia/news/nvidia-nvda-partners-with-virtana-for-enhanced-enterprise-ai
[2] https://www.whitehouse.gov/articles/2025/08/trump-effect-a-running-list-of-new-u-s-investment-in-president-trumps-second-term/