Semiconductor stocks, led by AI chip giant Nvidia (NVDA), seesawed Monday as investors weighed the risks of “buying the dip” against a prolonged downturn triggered by President Donald Trump’s recent tariffs . Nvidia shares closed up 3.5% at 97.64 after volatile trading, while the Philadelphia Semiconductor Index (SOX) gained 2.7%, reflecting a tentative recovery effort .
The rebound followed a sharp sell-off last week, when Trump’s “Liberation Day” tariffs—announced Wednesday—sparked a sector-wide rout, with Nvidia plunging 7.4% on Friday to its lowest level since August 2024 . Analysts warn the tariffs, targeting imports from Mexico, China, and elsewhere, could exacerbate existing demand weaknesses in PCs, smartphones, and autos, delaying a hoped-for 2025 chip-market recovery .
Nvidia’s AI Resilience
Bernstein analyst Stacy Rasgon reiterated an outperform rating on Nvidia, citing its AI data-center servers’ partial exemption from tariffs due to Mexico-based production under the USMCA trade agreement . Approximately 60% of Nvidia’s U.S. AI servers are manufactured in Mexico, with suppliers expanding local facilities to mitigate tariff risks . However, Rasgon cautioned near-term volatility, noting the stock was “completely hammered” by tariff fears but could rebound once markets stabilize .
Wall Street Pessimism Persists
Mizuho Securities highlighted “extremely negative” sentiment across semiconductors, with cyclical demand slumps now compounded by tariff-driven macroeconomic risks . Deutsche Bank slashed price targets for 16 chip stocks, including Nvidia, by 10%, anticipating muted Q1 earnings due to weak consumer demand and global economic headwinds . JPMorgan warned of further downside, projecting a 10% (5%-15%) drop for semiconductor stocks over the next six months as tariff impacts linger .
Tariff Fallout Broadens
The Trump administration’s tariffs have sent shockwaves beyond Nvidia, impacting stocks like Super Micro Computer (SMCI), which faces heightened risks due to its manufacturing exposure . Citi analysts warned of a potential 20% sector decline if tariffs trigger a broader slowdown, emphasizing the need for caution despite oversold conditions .
As investors grapple with geopolitical and macroeconomic uncertainty, the path to recovery remains unclear. While AI-driven demand offers long-term optimism, the near-term outlook hinges on tariff negotiations and global economic resilience .