The stock market took another hit after President Donald Trump announced sweeping tariffs of 10% or higher on some countries, escalating fears of a global trade war and adding pressure to an already struggling U.S. economy.
The S&P 500 dropped 4%. The tech-heavy Nasdaq Composite lost 5%. Nvidia, one of the winners for 2024, is down 6%.
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Severe tariffs could tip the economy into a slowdown and raise already stubborn inflation.
âThis was the worst-case scenario for tariffs and were not priced into the markets,â Mary Ann Bartels, chief investment strategist, Sanctuary Wealth, told CNBC. âThe big question is if 5,500 can hold on the S&P 500. If it cannot hold, we may see another 5-10% downside.â
Nvidia’s stock has struggled for weeks, and the strain may be growing.
Despite Nvidia CEO Jensen Huang highlighting many times that the demand for Blackwell is “extraordinary,” keeping up with that demand has started to pressure the company’s profit margins.
PATRICK T. FALLON/Getty Images
Nvidia could see more trouble ahead
Nvidia’s (NVDA)  share price is down 26% from its peak in January. The company is facing pressures on China’s cheaper AI model DeepSeek’s rollout, disappointing earnings, and a broader tech sell-off caused by economic uncertainties.
In February, the company reported fiscal Q4 revenue of $39.3 billion, a 78% surge from the year-earlier period. However, the growth largely slowed from the 265% the company posted a year earlier. Revenue growth from its key data center segment also slowed down.
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Despite Nvidia CEO Jensen Huang highlighting many times that the demand for Blackwell is “extraordinary,” keeping up with that demand has started to pressure the company’s profit margins.
Nvidia reported a non-GAAP 73.5% gross margin for the quarter, 3.2 points shy of a year earlier. The company attributed the smaller profit margin to newer, more complicated, and costly data center products, including Blackwell.
Now, the company could face more trouble because of tariffs.
Nvidia’s supply chain is mainly concentrated in the Asia-Pacific region. For the production of its chips, it is highly dependent on foundries such as Taiwan Semiconductor Manufacturing Company (TSM).
Related: Veteran analyst revamps recession outlook amid tariff war
The White House has said semiconductors would not be subject to the latest tariff. Still, potential retaliatory tariffs from other countries and the escalation of trade wars could weigh on Nvidiaâs business, as more than half of its revenue comes from sales outside the U.S.
Nvidia downgraded to hold at HSBC
Wall Street analysts are also questioning Nvidia’s pricing ability.
HSBC has downgraded Nvidia to Hold from Buy with a price target of $120, down from $175, thefly.com reported on April 3.
The analyst sees limited GPU pricing power going forward that caps earnings upside potential until opportunities evolve in robotics, autos and AI markets.
âIncreasing mismatches and inconsistencies in Nvidiaâs supply chain continue to grow and hence we believe it would be difficult for our bull case scenario, which suggests earnings upside potential, to materialize,â the analyst wrote.
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The firm sees limited room for significant earnings upside surprise over the next one to two years and potential re-rating headwinds that it thinks are “yet to be fully factored in by the market.”
Nvidia trades at $103 on April 3.
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