Nvidia’s $5.5B Fallout

Key Takeaways

• Nvidia Hit Hard: Nvidia dropped 7%, losing over $148 billion in market value due to new export restrictions on its $12 billion H20 chips for China.
• Global Chip Declines: U.S. export curbs caused losses across chipmakers, with AMD down 5.8% and ASML falling 7%.
• Geopolitical Pressure: U.S. tariffs and trade uncertainty continue to affect the semiconductor sector, potentially costing U.S. equipment makers over $1 billion annually.

Nvidia Faces Setback Amid Trade Pressures

Global chip stocks took a sharp dive on Wednesday due to rising concerns over U.S. President Donald Trump’s shifting trade policies. Nvidia (NVDA), which led the selloff, dropped 7%, losing over $148 billion in market value. This was triggered by the company’s announcement of a $5.5 billion charge in the first quarter, tied to new export restrictions on its H20 graphics processing units, designed specifically for the Chinese market. AMD, also impacted by curbs on its MI308 processors, warned of an $800 million loss and saw a 5.8% drop. 

The pressure extended to chip equipment makers: ASML missed order expectations and fell 7%, while Applied Materials and Lam Research each dropped about 5%. Other AI-related chipmakers, such as Arm, Broadcom, and Micron, saw declines between 2.5% and 4.6%. The VanEck Semiconductor ETF also slid over 4%, with global chip stocks feeling the heat. In Asia, Samsung closed down 3%, SK Hynix dropped 4%, and Japanese chip-testing company Advantest, a supplier to Nvidia, plummeted 5%.

Tech Giants and Markets Rattled

The turbulence spread across the tech sector and broader global markets. The Nasdaq Composite fell over 3%, with major tech stocks like Meta Platforms, Apple, Amazon, and Microsoft all slipping around 3%. Tesla tumbled 5%, while Alphabet lost more than 2%. In total, the “Magnificent Seven” tech stocks lost over $1.8 trillion in market value across two trading sessions. Year to date, Nvidia, Apple, and Amazon have lost about 20% of their value each, while Tesla has plunged more than 40%. 

Even after a brief rally fueled by Trump’s announcement of a 90-day pause on most reciprocal tariffs, the market remains volatile. In April alone, Apple (AAPL) and Meta (META) dropped more than 12% each, while Amazon (AMZN) and Tesla (TSLA) slipped more than 8%. Although semiconductors and some electronics are temporarily exempt from tariffs, Trump has warned of upcoming sector-specific levies that could cost U.S. semiconductor equipment makers over $1 billion annually.

Nvidia’s China Dependency and the Road Ahead

Nvidia’s (NVDA) struggles highlight the broader geopolitical uncertainty facing the semiconductor industry. The company confirmed it follows U.S. government guidelines on export licensing, but China, still a major revenue source, is becoming harder to access. China accounted for roughly 13% of Nvidia’s total revenue last year, or about $17 billion, down from 21% in fiscal 2023. The H20 chip segment alone made up about $12 billion of that, contributing approximately 30 cents per share in earnings. 

Analysts noted the H20 chip’s weak performance compared to Chinese alternatives, effectively handing market share to Huawei. AMD remains heavily reliant on China, with over 24% of its sales from the region. Nvidia had surged 18% on hopes of eased export curbs after CEO Jensen Huang’s meeting with Trump, but those gains have reversed. Still, the company is moving ahead with a $500 billion plan to build AI servers in the U.S. over four years. While demand for its Blackwell AI systems remains strong, near-term uncertainty persists.