TLDR
- Nvidia shares fell 2.92% to $135.13 after Trump accused China of violating a trade deal.
- The US plans to expand restrictions on China’s tech industry.
- Nvidia faces an $8 billion Q2 loss from the China chip sales ban.
- Despite headwinds, Nvidia posted strong Q1 revenue beating Wall Street forecasts.
- Earnings date set for August 27, 2025.
Nvidia Corporation ($NVDA) closed On Friday at $135.13, down 2.92%, and slipped further to $134.52 after hours as the market reacted to renewed US-China trade tensions.
President Trump declared Friday that China had “totally violated” a recent trade agreement, rattling tech stocks.
The Nasdaq fell 0.3% and the S&P 500 stayed flat as Bloomberg reported that the US government plans to widen its trade restrictions on China’s technology sector. This comes just weeks after both nations agreed to lower tariffs — the US reducing duties to 30% and China cutting to 10% — in what was hailed as a “historic deal.”
Heavy China Exposure Weighs on Nvidia
Nvidia was largely insulated from April’s import tax on Chinese goods, as most of its chips are produced in Taiwan and assembled in Mexico. However, a separate US ban on sales of Nvidia chips to China has hit the company hard.
Jensen Huang, CEO of U.S. tech giant Nvidia, said the company is leaving billions of dollars in revenue on the table because it can no longer sell to China, and China would move on with or without Nvidia chips. pic.twitter.com/1AxvBTu7KD
— China Xinhua News (@XHNews) May 31, 2025
In its latest quarterly report, Nvidia revealed a $2.5 billion revenue loss in Q1 due to the ban and expects an $8 billion hit in Q2. Nvidia sells custom, lower-performance versions of its Hopper AI chips (the H20) for the Chinese market, which now face strict US export controls.
CEO Jensen Huang confirmed on Wednesday’s earnings call that the company has no new products lined up for China. “Obviously, the limits are quite stringent at the moment,” Huang said. “And when the time comes, we’ll engage the Trump administration.”
Analysts Remain Cautiously Optimistic
Despite the near-term China struggles, Nvidia remains a dominant force in AI chips and data center products. DA Davidson analyst Gil Luria called China “the largest overhang on NVDA shares” until there’s clarity from Washington.
Morgan Stanley analyst Joseph Moore expressed confidence that Nvidia will eventually regain some China sales. “We remain convinced that there will be at least some recovery of the China opportunity,” Moore wrote to investors.
Even with Friday’s dip, Nvidia finished the trading week with a 3% gain, thanks to a post-earnings rally on Thursday. The company’s Q1 revenue exceeded Wall Street expectations, underscoring Nvidia’s resilience despite geopolitical risks.
Strong Long-Term Performance
Nvidia’s trailing returns are impressive. The stock has gained 22.33% over the past year and a staggering 1,428% over five years, crushing the S&P 500’s 12.92% one-year and 94.19% five-year gains. Year-to-date, Nvidia is up 0.63%, modestly ahead of the S&P’s 0.51%.
Investors are now looking ahead to Nvidia’s next earnings date, set for August 27, 2025, to gauge how the company navigates the evolving US-China landscape. For now, China remains the cloud over Nvidia’s otherwise stellar growth story.
