Nvidia, Palantir Stocks Plunge 15% on Trump Tariffs

Nvidia and Palantir, two leading companies in the artificial intelligence sector, experienced notable declines following the announcement of new tariffs by President Donald Trump. The tariffs, which target various goods including AI hardware, raised concerns among investors about the potential impact on these companies' operations and profitability. Nvidia, a prominent manufacturer of AI hardware, saw its stock drop significantly, reflecting broader market worries about the economic implications of Trump's tariff policies.

Palantir, an AI analytics company, also faced a substantial drop in its stock price. This decline comes amid growing concerns about the company's exposure to the Chinese market and the potential disruption of its supply chain due to the tariffs. Despite the market turmoil, analysts remain optimistic about the long-term prospects of AI stocks. Goldman Sachs analysts highlighted Palantir's potential for rapid growth in AI-enabled revenue, suggesting that the current market sell-off presents a buying opportunity for investors.

The broader market sell-off intensified, with major indices shedding significant points. The declines were driven by a rotation into more defensive areas of the market, as investors sought safety in stocks with steady revenue and dividends. The market's reaction to the tariffs reflects broader concerns about the economic impact of Trump's policies. Treasury Secretary Scott Bessent warned of a potential "detox period" for the economy as the new administration cuts government spending. President Trump himself acknowledged the possibility of a recession, describing the current economic situation as a "period of transition."

Despite the panic, some analysts remain bullish on AI-driven companies. Daniel Ives, an analyst, expects a massive spending boom from Big Tech to drive future growth. He believes that tech stocks will ultimately make new all-time highs. Ives acknowledges that markets have misjudged the tariff impact but focuses on the bigger picture. Tom Lee, another analyst, shares a similar view, arguing that the Federal Reserve could step in with interest rate cuts, giving tech stocks a needed boost.

In summary, while the new tariffs have caused short-term panic and significant declines in the stocks of Nvidia and Palantir, analysts remain optimistic about the long-term prospects of AI stocks. The current market sell-off is seen as a buying opportunity, with the potential for rapid growth in AI-enabled revenue and a massive spending boom from Big Tech driving future growth. Despite the economic uncertainties and potential for inflation, the outlook for AI stocks remains positive.