By Adam Clark, Brian Swint, and Tae Kim
Nvidia, the biggest U.S. chip maker by market value, was rising sharply in early trading Monday after the U.S. and China agreed to reduce most tariffs while they further negotiate a trade deal.
The chip maker's shares rose 4.1% to $121.42 after the market opened.
Other semiconductor stocks were also advancing, with the iShares Semiconductor exchange-traded fund up 6.7%. Intel climbed 3.1% and Marvell Technology added 7.3%. Super Micro Computer, which makes artificial-intelligence servers, jumped 7.6%. The Nasdaq Composite index rose 3.5%.
Treasury Secretary Scott Bessent said early Monday that U.S. and Chinese tariffs on each other's goods would be slashed sharply for 90 days while the U.S. and China continue trade talks. The latest negotiations could lessen fears that the worst-case scenario for the current trade war, where there is an effective trade embargo with triple-digit tariff rates on both sides, is less likely to occur going forward.
"As tariffs and the China situation becomes more clear, Nvidia gets much more investable. Knowing the rules will help," wrote Melius Research analyst Ben Reitzes in a research note.
Reitzes has a Buy rating and $150 target price on Nvidia stock based on a price-to-earnings multiple of 23 times his forecast for the company's earnings in fiscal 2028.
Meanwhile, Nvidia has raised prices of its graphics-processing units by as much as 25% to recoup some of the loss of the Chinese market and the cost of shifting production to the U.S., according to a report in Taiwan's DigiTimes on Monday. Nvidia declined to comment on the report.
The chip sector, however, isn't out of the woods. The tariff pause announced on Monday doesn't significantly affect semiconductor companies. While China's lowering of tariffs on U.S. imports will help some domestic chip makers on the margin, Nvidia's most advanced chips are still restricted for export to the Asian country. Furthermore, the Trump administration had already exempted semiconductors, smartphones, and computers from so-called reciprocal tariffs. Last month, White House officials said chips will be covered under a different sector tariff in the future.
On Monday, Secretary Bessent hinted that those sector tariffs are still coming. He said on CNBC that the reciprocal tariffs have nothing to do with industry-specific tariffs for "strategic necessities" like steel, semiconductors, and some medicines.
Write to Adam Clark at adam.clark@barrons.com and Brian Swint at brian.swint@barrons.com
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(END) Dow Jones Newswires
May 12, 2025 10:37 ET (14:37 GMT)
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