A surprising announcement from the White House is boosting many chip stocks, including Nvidia (NVDA) . According to President Donald Trump, the tariffs levied against China are going to be substantially decreased.
While little detail has been offered as far as Trump’s immediate plans for China tariff revisions, the market is reacting extremely well to this news. Nvidia is rising steadily, as are many of its peers in the artificial intelligence (AI) space.
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The tariffs have wreaked havoc on the global economy since President Trump first put them into effect. Despite his initial promise, they have failed to generate any type of economic growth so far and have mostly resulted in high prices and panic among consumers.
Despite these tariff-driven complications, Nvidia may be about to reap an unexpected benefit that could help push shares up in the short term, regardless of when Trump decreases the tariffs against China.
Nvidia CEO Jensen Huang has received some good news from the company’s clients in China.
Image source: Morris/Bloomberg via Getty Images
Nvidia is receiving good news from the East on multiple fronts
Over the past few weeks, Nvidia stock has struggled significantly, battling economic uncertainty as the tariffs continue to push down financial markets. For investors, this has led to a complicated outlook for the industry, even as companies have revealed plans to increase their AI spending in 2025.
As it turns out, though, that doesn’t just apply to tech firms in the U.S. Some of China’s most prominent companies have been stockpiling huge amounts of Nvidia’s H20 AI chips in preparation for darker days ahead, indicating a strong concern regarding supply in the near future.
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This list includes e-commerce leader Alibaba, tech conglomerate Tencent Holdings, and TikTok parent ByteDance. All three were likely bracing for an economic crisis in which shipments of these prized AI chips were cut off by U.S. government-imposed curbs.
Local media reported that companies had asked Nvida to ship an entire year’s supply of the AI-focused graphics processing units (GPUs) as soon as possible. While Nvidia designed this chip for the purpose of supplying Chinese clients with GPUs that complied with U.S. export policies, these companies seemed to fear that their shipments might be halted.
A Japanese media outlet provided further context on these developments, reporting:
“The three companies had asked Nvidia to ship a total of around 1 million H20s — roughly a full year’s supply — as soon as possible, ideally by the end of May, one person briefed on the matter told Nikkei Asia. The actual number delivered fell short due to the Trump administration announcing in early April that these chips would need a license for export, the source added.”
At a time when most coverage of the tariffs focuses on their negative impact on the tech sector, it is important to account for ways in which they can end up benefiting companies like Nvidia.
The fact that these companies rushed to stock up on these expensive chips bodes well for the AI leader.
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When Chinese AI startup DeekSeek released a large language model (LLM) trained on less advanced chips, Nvidia stock tumbled, and many other chipmakers followed suit. This indicates that demand for the chips, which made Nvidia famous, is still strong, even after DeepSeek triggered a massive selloff.
Nvidia may be well positioned to survive the trade war
Above all, a key takeaway from this development is that Nvidia is still the preferred AI chipmaker for companies that could be trying to buy their GPUs domestically. Chinese companies are working to build chips that can rival Nvidia’s, but so far, their country’s top buyers are fully committed to using the highly priced H20s.
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Nikkei Asia also reports that “the value of those rush orders exceeded $12 billion,” adding that ByteDance proved especially aggressive in its pursuit of Nvidia chips before the curbs took effect. According to sources, Nvidia managed to ship several millions’ worth of chip orders ahead of the restrictions.
Other sources revealed that these companies are extremely focused on building more data centers in the coming year and that so far, this goal has not changed. This suggests that either the current stockpiles are sufficient or that the companies are confident in their ability to procure more chips in the future.
The potential easing of some Chinese tariffs may lessen the impact of the trade war on Nvidia. But even if not, it’s clear that the looming curbs led to some lucrative orders. Demand for Nvidia’s chips obviously remains high, even in an age marked by uncertainty.
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