November 18, 2024

Nvidia Faces Risk from Potential Tariffs Amidst AI Boom, Bloomberg Analyst Says

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Nvidia (NVDA, Financials), which has tripled its market value this year, is set to report earnings on Nov. 20 as investors scrutinize the semiconductor manufacturer for signs of sustained demand for artificial intelligence-related technology, Bloomberg News columnist Tatiana Darie said Sunday.

Warning! GuruFocus has detected 5 Warning Signs with NVDA.

Set to unveil its results on Nov. 20, the semiconductor behemoth’s investors are mostly interested in future artificial intelligence-related technology demand.

Due to current trade restrictions, the paper says that Nvidia’s exposure to China has already reduced from 25% of its income in 2021 to 12% in the most recent quarter. Strong U.S. demand has caused notable increase in Nvidia’s profits despite this drop. With intentions to raise expenditure in 2025, major consumers like Microsoft (MSFT, Financials), Alphabet (GOOG, Financials), Amazon (AMZN, Financials), and Meta Platforms (META, Financials) spent $59 billion on data centre equipment last year.

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Beyond China, Bloomberg notes that more general tariffs might have an effect on Nvidia as well. After the first wave of tariffs, the shares of the firm dropped 31%. Although Nvidia’s foundations are strong, analysts believe that more trade restrictions might cause temporary performance degradation.

This article first appeared on GuruFocus.

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