Nvidia rose to start the second quarter Tuesday even as President Donald Trump's tariffs were set to fall in a day. It is not certain whether the tariffs will be applied to all U.S. trading partners or will be of a more selective and reciprocal nature. Meanwhile, reports stated that Trump had settled the 'Liberation Day' plan which will include raising revenues while also negotiating with other countries. Does that mean Nvidia stock is a sell now?
A week ago, Nvidia shares rose amid news that tariffs on the semiconductor sector may not land on April 2. But the administration added several Chinese companies to an export blacklist on national security concerns. U.S. companies selling chips to those companies will need to get government approval first.
In terms of its 12-month price performance, Nvidia has outperformed just 31% of all other stocks in Investor's Business Daily's database. That's down from 47% in four weeks.
But on IBD MarketSurge, IBD's premium stock research platform, the 200-day moving average has crossed above the 50-day moving average in what is known as the death cross. When the longer-term moving average rises above the shorter-term one, the chart indicates weakening action.
Nvidia's relative strength line, which compares the stock with the S&P 500 index, is also falling.
Earlier, at the GTC 2024, Chief Executive Jensen Huang gave updates on the company's big plans with Blackwell Ultra due later this year, as well as proposals for a system called Vera Rubin, expected in 2026. There's also another next-generation processor, Feynmann, planned for 2028. Huang also covered other developments in robotics, automotive and AI networking gear and inference software.
Chip Curb Risks
On Feb. 25, reports said that Trump was considering curbs on Nvidia chips that can be exported to Chinese companies such as Alibaba and Tencent without a license.
The Wall Street Journal reported that placing curbs on Nvidia chip exports to China can prove to be challenging as traders route them through third parties. But investors fear a complete ban on H20 chips could be the next tidal wave. Nvidia exports H20 chips to China and they are compliant with regulations, for now.
Stacey Rasgon, an analyst at Bernstein, noted that a complete ban would hand over the China artificial intelligence market to rivals like Huawei and would make "zero sense."
How Other Chip Plays Are Faring
On March 10, Oracle reported $130 billion in order backlog that did not include any contract for Stargate. Oracle Chief Executive Safra Catz also noted that the record booking showed demand was "enormous".
Earlier, Broadcom posted better than expected results after revenue from artificial intelligence grew 77% from the prior year to $4.1 billion. The company expects AI revenue to increase to $4.4 billion in the current quarter.
Broadcom's top three customers are aiming for 1 million chip clusters by 2027. The strong spending outlook on AI infrastructure lifted Nvidia stock.
Morgan Stanley analysts also noted that custom AI chips, which Broadcom specializes in, will likely rise from 11% to 15% of the AI chip market by 2030, with the majority of the balance going to Nvidia's graphic processing units.
Broadcom's results followed Marvell Technology, which gave a slight beat-and-raise earnings report.
Nvidia, Oracle, Marvell and Broadcom are on IBD Tech Leaders.
Nvidia Results Beat Views
Nvidia beat analyst earnings estimates on Feb. 26. Despite that, shares sank 8% the next day before heading even lower.
For its fourth quarter, the AI chip leader earned 89 cents per share on $39.33 billion in sales. Analyst estimates had called for 85 cents in earnings per share and sales of $38.1 billion. Nvidia is the only Magnificent Seven company to report a revenue surprise this earnings season.
Top three regions by sales were the U.S. at 47%, Taiwan at 16% and China, which accounted for 13% of total sales. The company also stated that three customers now accounted for more than 10% of revenue.
Among Nvidia's products, Blackwell already has become the fastest-growing segment, the firm's management stated. For the current quarter, Nvidia expects adjusted gross margins of 71%.
Nvidia Stock Price Target
On Feb. 25, The Wall Street Journal reported that recent challenges from DeepSeek and tariff threats have done little to dampen investors' enthusiasm for the stock.
Elsewhere, analysts at Mizuho noted on Feb. 14 that investors should be patient and hold out until the May quarter while Nvidia works through some "growing pains" in shipping its complex server. It is expected to drive strong sales in the second half the year.
They see Nvidia capturing 44% of the AI server market. But thanks to its pricing power, sales could be $260 billion of the $350 billion AI accelerator chip market in 2027. Mizuho has an outperform rating and price target of 175 on Nvidia stock.
Big Techs Confirm Huge Spending Plans
On Feb. 6, Amazon.com indicated it planned to increase its spending by 27% or $105 billion — mostly on AI data centers. But that was topped by Alphabet which plans to increase its spending by 57% for a total of $75 billion.
Amazon Chief Executive Andy Jassy noted that "most AI (computing) has been driven by Nvidia chips, and we obviously have a deep partnership with Nvidia and will for as long as we can see into the future."
However, Microsoft's spending on AI data centers is set to slow next year. Microsoft announced in December that the company faced no chip supply constraints.
View More Trump Tariffs News And Analysis
DeepSeek Hits Nvidia
Nvidia stock sank on Jan. 27 amid reports that the latest large-language model from Chinese AI lab DeepSeek came close to the performance of its American rivals at a fraction of the cost. DeepSeek said its AI models cost $5.6 million to train compared with $100 million-$1 billion that Dario Amodei, CEO of privately held Anthropic, noted as the cost for U.S. companies last year.
Nvidia is a top AI stock to watch despite the plunge.
Funds own 40% of Nvidia's outstanding shares, according to IBD MarketSurge. Going by its Accumulation/Distribution Rating of E, it would seem that funds aren't buying shares. The rating measures price and volume action over the last 13 weeks.
Nvidia Responds To Export Curbs
The Biden administration issued new regulations on chip exports on Jan. 13. Apart from 18 countries, chip exports will be restricted to 50,000 per country.
How Invested In The Stock Market Should You Be Right Now?
Reports also stated that countries would need a license when orders exceed 1,700 advanced AI chips. The restrictions will impose control over how "America's leading semiconductors, computers, systems, and even software are designed and marketed globally," Ned Finkle, Nvidia's vice president of government affairs, said in a statement.
Similar to export curbs, a trade war fought with tariffs could hurt foreign sales of U.S. semiconductor companies to some countries.
Ken Glueck, executive vice president at Oracle, noted that the new rules could reduce the global chip market by 80% for U.S. chip companies, and that "a rule of this consequence on that timetable will turn the U.S. cloud industry upside down."
Nvidia Stock: Morgan Stanley Top 2025 Pick
Shares gained nearly 4% on Dec. 20 after Morgan Stanley analyst Joseph Moore named Nvidia a "top 2025 pick."
The analyst does not expect delays in Blackwell chip production. Moore also said that he expects a slowdown in the older Hopper chip. But he adds that will make more high-end memory chips available for its Blackwell line.
Nvidia Earnings
For Nvidia, its earnings growth is its strong point.
It also replaced Intel in the Dow Jones Industrial Average in November, becoming the fourth Magnificent Seven stock to join the list of blue chips. The others are Apple, Amazon.com and Microsoft.
The AI chip behemoth has an ideal Earnings Per Share Rating of 99. Further, the stock's all-around strength, or Composite Rating, sits at 68.
IPhone Moment Of AI
Nvidia's graphics processing units help accelerate computing in data centers and AI applications.
The company pioneered graphics processors used in such industries as health care, game machines, automobiles and robotics.
In March 2023, generative AI took a leap forward with OpenAI's ChatGPT. According to CEO Huang, Nvidia's AI-capable chips paved the way for the "iPhone moment of AI."
That helped Nvidia turn the tide on its results. It had reported three quarters of declining year-over-year sales. It also showed four quarters of tapering earnings in late 2022 and early 2023.
But then the company achieved record top- and bottom-line growth in the seven most recent quarters.
Is Nvidia Stock A Buy?
Looking at chart signals and technical measures can help investors assess whether Nvidia stock is a buy or sell now.
Despite an earnings beat, shares plunged 8% on Feb. 27. Shares remain below their 200-day moving average. Nvidia has to at least retake its 50-day moving average before it becomes a buy again. But they have been hitting resistance at that level since December.
