Staff Reporter
Nvidia (NVDA) has faced significant ups and downs in 2025, with its stock down 15% year to date, despite some recovery. Investors are wary of potential impacts from President Donald Trump’s tariffs, which could affect demand for Nvidia’s leading data center chips vital for artificial intelligence (AI) applications.
While semiconductors are exempt from the harshest tariffs, many of Nvidia’s clients are still grappling with rising costs and possible sales declines, which may lead to cuts in capital expenditures (capex).
Tech giants Meta Platforms (META), Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN) — significant purchasers of Nvidia’s AI chips — recently provided encouraging updates on their AI spending for the year.
Nvidia’s Chips: The Gold Standard in AI
Nvidia’s H100 graphics processing unit (GPU) has dominated the AI data center market through 2023 and much of 2024. Though it’s being phased out in favor of the more advanced Blackwell and Blackwell Ultra architectures, it remains a benchmark in the industry.
The new Blackwell Ultra GB300 GPU can execute AI inference up to 50 times faster than the H100 in certain configurations, which is crucial for developing next-gen “reasoning” models. These models, unlike traditional large language models (LLMs) that provide quick responses but can make errors, spend more time processing information to enhance accuracy.
However, as Nvidia CEO Jensen Huang points out, reasoning models require up to 100 times more computing power than conventional models due to their increased complexity. The forthcoming Blackwell Ultra chips, set to ship in the second half of 2025, are a step forward, but developers are already looking ahead to Nvidia’s next-generation Rubin GPUs, expected to offer 3.3 times more computing performance and release in 2026. Nvidia’s commitment to innovation positions it for long-term growth, making investors eager for signs of sustained demand.
Positive Updates from Key Customers
Although Nvidia is an American company, most of its chips are manufactured overseas, primarily by Taiwan Semiconductor Manufacturing. Trump’s tariffs exempt semiconductors, recognizing the need to maintain U.S. leadership in AI technology. However, the broader impact of tariffs on Nvidia’s customers remains a concern, as these companies spend billions on AI chips and data center infrastructure. Any slowdown in their primary operations could lead to reduced spending.
For instance, while Amazon may face challenges from tariffs on its e-commerce revenue, its cloud services and advertising segments are not directly affected. Similarly, Meta, Microsoft, and Alphabet primarily offer digital products and services, positioning them to better navigate global trade tensions.
When these companies reported their first-quarter financial results for 2025, they provided reassuring signals for Nvidia investors:
- Meta raised its 2025 capex forecast to $64 billion to $72 billion, up from $60 billion to $65 billion.
- Microsoft maintained its capex forecast at around $80 billion for fiscal 2025.
- Alphabet kept its capex forecast steady at $75 billion.
- Amazon also did not change its capex forecast, expecting to spend about $105 billion this year.
Nvidia reported a remarkable $115.2 billion in data center revenue for fiscal 2025, marking a 142% increase from the previous year. Huang anticipates that data center spending could exceed $1 trillion annually by 2028, driven by the increasing demand for computing power from reasoning models, highlighting significant growth potential ahead.
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