Geopolitical tensions are dragging down some of the tech sector’s biggest names today, including Nvidia (NASDAQ:NVDA). Some statements from Donald Trump have cast doubt over the future of companies within the semiconductor manufacturing space, such as Taiwan Semiconductor Manufacturing (NYSE:TSM) and NVDA stock.
The former president recently offered some insight into his plans for international trade, and they aren’t good for many U.S. companies. In an interview with Bloomberg News, he stated, when asked how he would handle U.S.-Taiwan relations: “I think Taiwan should pay us for defense. You know, we’re no different than an insurance company. Taiwan doesn’t give us anything.”
Meanwhile, trouble is also brewing for chip stocks on the other side of the aisle. The Biden administration is reportedly considering imposing even stricter crackdowns on nations that give Chinese companies access to advanced chipmaking. These developments are casting dark shadows over the entire sector today.
What’s Happening With NVDA Stock
Both TSM and NVDA stocks are down 6% today as these news stories continue to trend. This combination of bad news from both Trump and Biden will make it difficult for companies in the chipmaking space to overcome the market’s negative momentum today. Things are even worse for ASML Holding (NASDAQ:ASML), a Dutch semiconductor company that will be significantly impacted if the White House moves forward with these further crackdowns. ASML stock is down 12% as of this writing, even after beating analyst estimates for second-quarter earnings.
Right now, things are a bit uncertain for the tech sector in general. Trump’s recent pick for vice president, J.D. Vance, has made it clear that he supports anti-trust crackdowns on big tech. But given Vance’s history as a venture capitalist himself, it’s unclear exactly what would happen if he were to gain the power of the Oval Office.
What is clear is that Nvidia is likely to bounce back from this difficult trading day. Right now, Trump is in full focus, but the former president has a history of making bold statements and then failing to deliver on what he has promised. However, NVDA stock has a history of rallying through difficult economic times due partly to its strong financials. InvestorPlace contributor Vandita Jadeja recently provided detailed context on the company’s strengths, stating:
“For the first quarter, it saw a 262% year-over-year jump in revenue to $26 billion and a 427% YOY jump in the data center revenue to hit $22.6 billion. Once known for setting a gold standard in Graphic Processing Units (GPUs), Nvidia has become the hottest company today. It announced a stock split in the first-quarter results which has made the stock accessible to all. For the second quarter, it is aiming for a revenue of $28 billion.”
When the winds shift again, which they likely will soon, powerful tech stocks will be back to trending upward. And whether or not the White House moves forward with its proposed chipmaking crackdowns remains to be seen. Such measures would be far worse for companies like ASML than for Nvidia.
On the date of publication, Samuel O’Brient held a LONG position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in NVDA.
