Trump Tariff Delay Boosts NVIDIA, Broadcom Stock Picks

The Trump administration's decision to temporarily suspend additional tariffs on mobile phones, semiconductors, and computers has led to a reaffirmation by American banks of their top semiconductor stock picks, which include NVIDIA (NVDA.US) and Broadcom (AVGO.US).

Despite the tariffs being only delayed, the 1-2 month suspension period is generally beneficial. The move by the Trump administration to delay these tariffs provides a temporary relief for the semiconductor industry, which has been grappling with trade tensions. This decision is expected to have a positive impact on companies like NVIDIA and Broadcom, which are key players in the semiconductor sector. The suspension of tariffs, even if temporary, can provide a breathing room for these companies to navigate the complex trade landscape and focus on their core operations.

The reaffirmation of NVIDIA and Broadcom as top picks by American banks underscores the confidence in these companies' ability to weather the storm and continue to deliver value to their shareholders. The semiconductor industry is a critical component of the global economy, and any disruption in this sector can have far-reaching consequences. The temporary suspension of tariffs is a welcome development for the industry, and it remains to be seen how the situation will evolve in the coming months.

Analysts have noted that the Trump administration's current focus seems to be on enhancing the U.S.'s self-sufficiency in semiconductor production. This goal, while related to narrowing the long-term trade deficit through tariffs, is distinct. The administration's plans to introduce new "industry-specific" tariffs in the coming months could potentially impact U.S. electronic products assembled in China and utilizing foreign-made processors.

While the specifics of these new tariffs remain unclear, analysts speculate that they may take into account recent investment expansions in the U.S. by companies such as Taiwan Semiconductor Manufacturing Company (TSMC), Apple, and NVIDIA. TSMC, in particular, is expected to conduct front-end semiconductor processing for most, if not all, U.S. fabless customers at its Arizona factory in the future.

Additionally, the resilience of cloud capital expenditures is expected to benefit semiconductor companies related to artificial intelligence, such as NVIDIA and Broadcom. Companies involved in chip design, like Cadence Design Systems (CDNS.US) and Synopsys (SNPS.US), are also favored due to their stable research and development expenditures.

Furthermore, semiconductor equipment companies like Lam Research (LRCX.US) and KLA Corporation (KLAC.US) are anticipated to benefit from industry reshoring efforts. These companies are well-positioned to meet earnings expectations, largely due to their strategic advantages in the market.