Nvidia’s Shares Gain in Premarket as US-China Trade War Cools

Nvidia (NASDAQ: NVDA) shares surged over 5% in premarket trading Monday after the United States and China reached a deal to slash reciprocal tariffs during a 90-day hiatus. The agreement offers a reprieve for the semiconductor giant, which had previously warned of substantial financial impacts from export controls and tariffs targeting its China business.

US-China Trade War Cools as 90-Day Pause on Tariffs Announced

U.S. Treasury Secretary Scott Bessent announced on Monday that the United States and China have reached a deal for a 90-day pause on trade measures following negotiations with Chinese officials in Geneva over the weekend. The agreement will slash reciprocal tariffs during this cooling-off period, easing fears of an escalating trade war between the world’s two largest economies.

This development comes as a significant relief for financial markets that have been rocked by volatility since President Trump’s “Liberation Day” global tariff announcements on April 2.

The dollar index jumped to a one-month high on the news, though it remains 2.5% below its level prior to the April tariff announcements. The trade tensions had been particularly concerning for technology companies with significant exposure to China, with the “Magnificent Seven” tech stocks shedding more than $1.8 trillion in market value over just two trading days following the initial tariff announcements.

For the semiconductor industry specifically, which relies heavily on global supply chains and international markets, the trade war pause offers breathing room after weeks of uncertainty about future business operations.

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How China Sales Affect Nvidia

The U.S.-China trade truce comes at a critical time for Nvidia, which had disclosed significant impacts from export restrictions targeting its China business. In a filing last month, Nvidia revealed it would take a $5.5 billion charge in the first quarter tied to exporting its H20 graphics processing units to China and other countries. These specialized chips were designed specifically for the Chinese market to meet U.S. export restrictions barring the sale of advanced artificial intelligence processors that were implemented during the Biden administration.

According to CNBC, the H20 chips represented an estimated $12 billion to $15 billion in revenue for Nvidia last year, making China one of the company’s most crucial markets.

The company had been caught in the crossfire of escalating tech competition between the U.S. and China, with the government requiring special licenses to ship certain chips to China and other destinations. While the current 90-day pause doesn’t permanently resolve these issues, it provides temporary stability and potentially opens the door for more measured negotiations.

Nvidia wasn’t alone in facing China-related challenges—AMD (NASDAQ: AMD) had also warned of an $800 million hit from curbs on its MI308 products, while Dutch semiconductor equipment maker ASML (NASDAQ: ASML) missed order expectations and cited tariff restrictions as creating demand uncertainty. The semiconductor sector had been among the hardest hit by the trade tensions, with the VanEck Semiconductor ETF declining more than 4% at one point amid concerns that Trump’s trade policies could stifle growth for critical components used in the world’s largest tech innovations.

Year to date, Nvidia has lost about a fifth of its value, mirroring similar declines seen in other major tech stocks despite the company’s continued dominance in AI chip markets.

Nvidia Shares Gain in Premarket Trading Amid Broader Market Rally

As of 6:37 AM EST on Monday, Nvidia shares were trading at $122.57 in premarket, up $5.92 or 5.08% from Friday’s close of $116.65. The stock had fallen 0.61% or $0.72 during Friday’s regular trading session. This morning’s surge comes as Dow futures rocketed higher by 1,000 points following the announcement of the U.S.-China trade agreement.

Nvidia’s stock has experienced significant volatility in recent weeks, with the company now trading well below its 52-week high of $153.13 but above its low of $86.82. With a market capitalization of approximately $2.85 trillion, Nvidia remains one of the world’s most valuable companies despite recent pressures.

The stock is down 13.13% year to date, underperforming the S&P 500’s 3.77% decline during the same period. However, its one-year performance remains positive at 31.48%, and its three-year return stands at an impressive 589.29%. Nvidia’s current PE ratio of 39.68 reflects continued investor expectations for strong growth despite recent challenges.

The average analyst price target for Nvidia sits at $163.12, suggesting potential upside of about 33% from Friday’s closing price. Trading volume will be closely watched when regular trading begins, as the stock has averaged nearly 285 million shares changing hands daily, reflecting its position as one of the most actively traded securities on the market.

With Nvidia scheduled to report earnings on May 28, investors will be paying close attention to how the easing trade tensions might affect the company’s outlook for the remainder of the year.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.