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The announcement of global tariffs on 2 April shook financial markets. The implications and subsequent ramping up of tensions between the US and China meant that global tech shares were hit hard. Nvidia (NASDAQ:NVDA) stock experienced high volatility in the immediate aftermath. Yet with news over the weekend of positive talks from both countries, here’s where the share price is now.
Yo-yo movements
I’m going to assume that an investor put £5k in the stock first thing on 1 April, at a price of $107.50. The share price closed yesterday (12 May) at $123, meaning the investor’s up 14.48% over a six-week period. In terms of profit, the unrealised gain would mean the initial investment’s now worth £5,724. Not bad at all!
What’s even more impressive is the volatility during the holding period. When the tariff news first broke, Nvidia stock tumbled. On 4 April, it traded down to $94. After bouncing back, it again moved lower towards $95 later in the month before having another move higher. During April, when the stock was around these levels, the investor would have been almost 13%.
The share price has risen 36% over the past year, but it’s still far off the 52-week highs, which sit at $149.43. This shows that even with the recent surge, there could be further room for the stock to move higher in coming months.
Trade musings
One of the main factors that could push it even higher is continued progress on trade deals between the US and China. Nvidia currently requires licenses to export its H20 AI chip to China. The move’s designed to safeguard national and economic security, according to the US Commerce Department. Others see it as more of a trade bargaining tool, which could be eased or even removed if ties improve. This would be a big positive for the company, with higher revenue potential in a rapidly growing market.
Importantly, even without company-specific factors, the stock could still do well. Nvidia’s a member of the ‘Magnificent Seven’, a group of US mega-cap tech firms. When investor risk sentiment’s positive, they tend to gravitate towards buying these types of growth stocks. So this flow of purchases could help lift the whole group, including Nvidia.
An evolving sector
Despite all of this, one concern is that AI’s being developed at a rapid pace. Nvidia had a clear first-mover advantage. Yet looking forward, cheaper alternatives out of China, along with existing US competitors catching up, could all spell trouble.
Furthermore, the volatile nature of the share price (as shown over the past six weeks) might be enough to put off some. In spite of this, I think it’s an idea for investors to consider, given the potential trajectory of US and China trade talks.
