By Adam Clark
Nvidia stock was rising early Wednesday amid a wave of market optimism on easing U.S.-China tensions.
The chip maker's shares were up 5.2% at $104.07 in premarket trading. The stock rose 2.0% on Tuesday.
The shares were moving up with the broader market after President Donald Trump said U.S.-imposed tariffs of 145% on imported goods from China will come down "substantially" after the two sides negotiate a deal. Futures tracking the Nasdaq 100 were gaining 2.3%.
While lower tariffs on China won't have much of a direct effect on Nvidia -- which sources the majority of its chips from Taiwan -- it could reduce fears over retaliation and the potential level of sector-specific levies on imported semiconductors.
While tariff fears might have softened, the Trump administration still hasn't yet made clear how it intends to apply former President Joe Biden's so-called AI diffusion rules to control chip exports before they take effect on May 15.
"In our view, the upcoming AI Diffusion Rule remains the biggest near-term risk, with our worst-case scenario assuming another 10% sales and up to 11% of EPS [earnings per share] shaved off from our new base case," wrote BofA Securities analyst Vivek Arya in a research note.
However, Arya kept a Buy rating on Nvidia stock, noting it is trading at a price-to-earnings multiple of around 19 times its forecast profit for 2026. He lowered his price target to $150 from $160.
Among other chip makers, Advanced Micro Devices was rising 3.6% and Broadcom was gaining 3.4% in premarket trading.
Write to Adam Clark at adam.clark@barrons.com
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April 23, 2025 05:10 ET (09:10 GMT)
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