NVIDIA shares fell sharply on Thursday over fears that President Donald Trump’s newly announced tariffs would damage the company’s business.
But just two weeks ago, CEO Jensen Huang suggested his company was in good shape in the trade war, saying Nvidia could be linked to tariffs and even recession.
At the company’s GTC meeting on March 19, Huang told financial analysts that he did not expect the company’s perception of tariffs to be hit hard. “The short-term impact of tariffs on us will have some impact,” he said.
After Trump announced new tariff rates in dozens of countries, including 34% in China, 46% in Vietnam, 26% in India, the Nasdaq composite rate fell 6%, and Nasdaq stock fell 6%.
China’s total ratio could be as high as 79% when including tariffs already imposed on the country. The White House said semiconductors will not be exempted, but the administration may still sign chips in the future.
Huang said in his March 19 comment that the company is improving to bring more chip production to the U.S., mentioning Taiwan Semiconductor’s recent announcement of a $100 billion investment to build more chip factories in Arizona.
Huang said NVIDIA has made bargaining chips in the state, and over time, domestic production will increase more domestic production. “The ability to manufacture onshore is not my focus,” he said. “In the long run, we will have manufacturing onshore,” indicating that more AI hardware systems and chips will be made in the United States as needed.
However, most of Thursday’s sell-off exceeded tariffs, with investors worried about economic growth and the possibility of a recession due to the trade war.
Some of NVIDIA’s largest customers, including the Meta platform, Alphabet, Amazon.com and Microsoft, have a large business exposure to consumer spending and enterprise technology budgets, which will be affected by the economic deterioration.
But if growth shakes, Huang has been defending Nvidia’s position. “If there is a recession, I think companies working in AI will shift more investments to AI,” he said at a recent meeting. “Every CEO will know what to do and move to what is growing.”
NVIDIA outperforms performance in good economic times. Its CEO also saw opportunities during tough times.
Write to Tae Kim via tae.kim@barrons.com
