Did Nvidia Benefit From The Trade Tariffs Pause (At Least For 90 Days)?

From two days of trading since the weekend announcement of the reported agreement between China and the US to ease tariffs for 90 days as trade war talks extended on 12 May 2025. We have seen that Nvidia looks likely to benefit, at least indirectly.

Two days of tradings have seen $NVIDIA(NVDA)$ stock price surged by over 5% on Monday (12 May) and Tuesday (13 May). In this article, I would like to share on why Nvidia would likely be benefitting at least indirectly.

I am holding my positions in Nvidia for long term.

Market Sentiment: The news of easing trade tensions generally boosts overall market sentiment, particularly for technology stocks that have been sensitive to trade war concerns. Nvidia, being a leading tech company, often moves with broader market trends.

Based on 64 analysts from Tiger Brokers, we are seeing a 53% BUY signal and 34% Strong Buy, looks like the mojo is back for Nvidia.

Semiconductor Sector Rally: The semiconductor sector as a whole reacted positively to the news. The $Philadelphia Semiconductor Index(SOX)$ reportedly had its highest close since February 2025, with Nvidia's stock also surging.  

We have seen SOX went up by 3.15% on Tuesday (13 May), and we are seeing the bulls back in control and it is making a very strong daily uptrend continuation.

Reduced Uncertainty: The easing of tariffs, even temporarily, reduces some of the uncertainty surrounding the global economic outlook and supply chains, which can positively influence investor confidence in companies like Nvidia.

Indirect Impact on AI Chip Sales: While the direct impact of these specific tariff reductions on Nvidia's advanced AI chip sales to China might be limited due to existing export restrictions, a broader improvement in US-China relations could potentially lead to a more favorable environment for future negotiations regarding technology exports. Some reports suggest that the US administration was planning to unveil changes to AI diffusion rules which could favor tech companies wanting to see trade restrictions eliminated.

Positive Momentum: The news created positive momentum in the market, which can often lead to further gains, especially for high-growth stocks like Nvidia.

Based on the RSI which I used to determine the stock momentum, we are seeing positive momentum formed for Nvidia, and it looks to continue the trend till its earnings on 28 May 2025.

Nvidia's Stock Performance

Nvidia's stock (NVDA) reportedly surged by over 5% on May 12, 2025 and May 13 2025, following the announcement. This significant single-day gain indicates a positive market reaction to the news.  

Important Considerations Regarding China

US Export Restrictions: It's crucial to remember that the US has imposed specific export restrictions on advanced AI chips to China, which have significantly impacted Nvidia's sales in the region. These restrictions are separate from general tariffs and may continue to limit Nvidia's direct business with China.  

China's Importance to Nvidia: While the percentage of Nvidia's revenue directly from China has decreased due to these restrictions, it still remains a significant market. Any easing of tensions could be viewed positively for potential future opportunities.

Stockpiling by Chinese Companies: Some reports suggest that Chinese companies have been stockpiling Nvidia's H20 AI chips in anticipation of further restrictions, indicating continued demand despite the regulatory challenges.  

Summary

While the direct tariff reductions might not have immediately removed the hurdles for Nvidia's advanced chip sales to China, the broader easing of trade tensions and the resulting positive market sentiment likely contributed to Nvidia's stock surge on 12 May 2025 and 13 May 2025.

The continuation of this "bull run" will depend on various factors, including the sustainability of US-China trade relations, Nvidia's overall financial performance, and the ongoing demand for its products in other markets.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia would continue this “bull run” past its earnings call on 28 May 2025.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.