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Nvidia (NVDA) shares are in focus today after a Barclays analyst lowered his expectations for the chip maker, citing President Donald Trump’s tariffs and the subsequently emerging trade war, particularly between the U.S. and China.
Tom O’Malley lowered his price target on NVDA yesterday to $155, which continues to represent exciting upside potential of about 50% from current levels.
On Tuesday, the firm’s analyst maintained his “Overweight” rating on Nvidia stock as well, indicating continued confidence in its long-term prospects.
Why Did Barclays Lower the Price Target on Nvidia Stock?
China has already announced unprecedented retaliatory tariffs on American goods in response to Trump’s new trade policies.
According to Tom O’Malley, escalating U.S.-China trade tensions could prove to be a major headwind for NVDA this year as its revenue is significantly exposed to the largest Asian economy.
In 2024, the AI darling generated about $10.31 billion in revenue from China, which made up nearly 17% of its overall yearly revenue.
Note that Nvidia stock is already down more than 30% from its 52-week high on concerns that Trump’s tariffs and the ensuing retaliation from other countries will hurt the demand for its products moving forward.
U.S. Export Restrictions to Weigh on NVDA Shares
Barclays trimmed its price objective on Nvidia stock also because the Trump administration has heightened restrictions on export of advanced chips to China.
Last week, Nvidia said the new restrictions that particularly apply to its H20 chips will result in a quarterly charge of as much as $5.5 billion.
Additionally, tech titans, including Microsoft (MSFT) and Amazon (AMZN), have already started cutting back on AI spending. Such an AI slowdown could further hit NVDA’s earnings in 2025.
Is Nvidia Still a Great Long-Term Investment?
Despite aforementioned headwinds, Wall Street remains largely bullish on Nvidia stock.
The consensus rating on NVDA shares currently sits at “Strong Buy” with the mean target of about $169 that indicates potential upside of 65% from current levels.
This indicates that while near-term challenges are not lost on analysts, they continue to believe in the AI stock’s potential over the longer term.
