Why Is Nvidia Stock Going Up 19%?
Synopsis
Why is Nvidia stock going up by an impressive 19%? The answer lies in significant developments surrounding U.S. export strategies with China. On April 9, President Trump announced a 90-day pause on reciprocal tariffs,…
Why is Nvidia stock going up by an impressive 19%? The answer lies in significant developments surrounding U.S. export strategies with China. On April 9, President Trump announced a 90-day pause on reciprocal tariffs, along with a baseline 10% tariff on imports during this window. This policy shift injected optimism into the stock market, leading to a 9.5% surge in the S&P 500 and a remarkable 12.2% spike in the Nasdaq, with Nvidia emerging as one of the standout gainers.
Technology stocks, particularly hard-hit earlier this year due to concerns about a slowing economy and a potential plateau in AI-related expenditures, were among the strongest performers. Nvidia, heavily reliant on its advanced AI processing units, has been significantly impacted this year despite its previous meteoric rise. By 2024, Nvidia's stock price appreciated by 171%, boasting a remarkable 684% gain since 2022. However, the introduction of cost-effective competitive AI models such as DeepSeek and fears surrounding curtailed investments by hyperscalers like Microsoft and Amazon contributed to a 15% decline in share price earlier in 2025.
The latest development concerning the suspension of further tariffs on Nvidia's H20 chip for the Chinese market has provided a much-needed tailwind for the company’s stock.
How the AI Boom Drives Nvidia Stock Surge
The rise of artificial intelligence has turned into a game-changing phenomenon across industries. From banking and retail to pharmaceuticals and defence, businesses globally are leveraging AI to enhance operations, reduce risks, and gain strategic advantages. The ubiquity of AI-powered tools, such as OpenAI's ChatGPT—which became the fastest app to reach one million users since its launch in November 2022—and Google's Gemini, exemplifies the technology's rapid mainstream adoption.
Some of the world's largest corporations, led by hyperscalers like Microsoft, Google, and Amazon, have plunged vast sums into building the infrastructure necessary to meet the rising demand for AI applications. Microsoft and its peers collectively spent $192 billion on capital expenditures in 2024, a notable rise from $117 billion in the previous year.
Nvidia has emerged as a prime beneficiary of this trend, supplying the cutting-edge GPUs essential to power the intensive workloads generated by AI models. Demand for Nvidia's flagship products, such as its H100, H200, and the latest Blackwell AI chips, has propelled its annual revenue beyond $130 billion in 2024, representing growth of 114% year-over-year. The surge in high-performance chip sales also led to an astonishing increase in net income, climbing from $5 billion in 2023 to nearly $73 billion in 2024.
Challenges in China
While Nvidia has seen global AI demand soar, regulatory challenges in China have posed significant obstacles. Historically, China accounted for roughly 20% of Nvidia’s data centre sales. However, heightened U.S. export restrictions on cutting-edge AI technology have halved Nvidia’s revenue from the region.
To navigate these restrictions, Nvidia introduced modified AI chips such as the H20, tailored to meet U.S. regulations while still capturing a slice of the lucrative Chinese market. Significant Chinese tech players, including Alibaba, Tencent, and ByteDance, placed orders worth $16 billion for H20 chips in the first quarter of 2025. However, there was risk that even these modified chips could face additional regulatory scrutiny.
Recently, uncertainty regarding the future sale of the H20 to China has eased. Sources, including NPR, report that the U.S. government has deprioritised its consideration of further restrictions on these chips. This decision is speculated to be linked to Nvidia CEO Jensen Huang’s lobbying efforts, including discussions about contributing to U.S.-based data centre construction.
This regulatory reprieve bodes positively for Nvidia's ability to retain its foothold in the Chinese market without further setbacks, offering a significant boost to investor sentiment.
Outlook for Nvidia
Although challenges remain—for instance, the potential for reduced AI investment by hyperscalers should the macroeconomic environment weaken further or competition intensify with emerging cost-efficient AI model developers like DeepSeek—the latest developments have reinvigorated confidence in Nvidia.
The firm's ability to capitalise on the global transition towards AI-powered ecosystems continues to underpin its spectacular financial performance. While management will need to deftly address potential headwinds, such as ongoing geopolitical tension and domestic AI chip production, the company's position as a leader in high-performance AI hardware leaves it well-positioned for the future.
Source
The Street: Surprising China news
Explore more entrepreneurial insights and success stories at Inspirepreneur, your go-to magazine for business innovation and leadership.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
You Might Also Like
Kodiak AI raises $100M as discounted share sale triggers 37% stock fall
Apple Announces $500bn in US Investments, 20,000 Jobs Possible
