Why Nvidia Stock Is Tumbling Today

Source Motley_fool

Nvidia (NASDAQ: NVDA) shares are plunging today as investors worry that a major market for the artificial intelligence (AI) leader may be getting choked off. Nvidia has been caught in the trade battle between the U.S. and China before. But a move by the Chinese government today more directly targets Nvidia's AI chips than it had in the past.

That news drove Nvidia shares more than 5% lower this morning. As of 11:37 a.m. ET, Nvidia stock was still down by 4.7%. Global trade pressure is part of the reason shares have dropped about 8% year to date.

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Nvidia walks a tightrope

Concerns about Nvidia's business came from both sides today. The U.S. has announced a new trade blacklist of Chinese companies citing national security concerns. The list of more than a dozen Chinese tech companies includes major Nvidia customers. The U.S. government will now need to approve sales to companies on the list.

At the same time, Chinese regulators have reportedly been pressuring its largest technology companies from purchasing Nvidia's H20 semiconductor chips citing the need for energy efficiency improvements. The H20 was specifically designed to qualify for sale in China after the U.S. imposed sanctions that disqualified its most powerful chips.

The situation adds uncertainty for investors in a meaningful market. China was Nvidia's fourth-largest market, contributing $17.1 billion in revenue in fiscal 2025. That was 13% of its total sales.

Trust experienced leadership

Nvidia CEO Jensen Huang has proven his leadership abilities in navigating trade issues before. As far back as 2022, Nvidia transitioned some operations out of China due to export controls. While data center revenue in China grew last year, the company says as a percentage of its total, it remains well below levels achieved prior to the onset of export controls in late 2023.

Yet the company has thrived. Investors should feel confident it can navigate the current environment as well. Today's drop looks to be another opportunity to buy shares of the AI leader.

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Continue »

*Stock Advisor returns as of March 24, 2025

Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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