chip stocks tumble as tariff war escalates: nvidia dips below critical level

2025-04-05 general

Washington, Saturday, 5 April 2025.
chip stocks are getting hammered. Trump’s tariffs and China’s retaliation have sent shockwaves through the market. The Philadelphia Semiconductor Index plunged about 7%. Nvidia, a market darling, suffered a significant blow, breaching its 200-day moving average. Investors are worried. This escalating trade war could spell trouble for the financial health of semiconductor companies, already reeling from supply chain disruptions and potential cost increases. Is this the start of a deeper downturn?

chip sector under pressure

The broader market felt the impact as well. Major indexes experienced significant declines following the tariff announcements [2]. The S&P 500, Dow Jones Industrial Average, and Nasdaq all fell by approximately 4% [2]. The Philadelphia Semiconductor Index (SOX) took a bigger hit, dropping about 7% [2]. Some of its constituents, including Marvell Technology, Coherent, Entegris, and Micron Technology, saw their shares plunge by over 7% each [2]. This widespread downturn reflects growing anxiety about the trade war’s potential impact on the entire economy [7].

nvidia’s fall from grace

Nvidia (NVDA), once a stock market darling, has been particularly vulnerable [2]. Its shares tumbled, falling below the critical 200-day moving average [1]. This decline reflects concerns about the company’s exposure to the escalating trade tensions [7]. Wedbush analysts suggest that Nvidia, along with other chip companies heavily reliant on supply chains in mainland China and Taiwan, face risks to pricing and profit margins [4]. This raises questions about the long-term implications for their global supply chain strategies [4].

analyst downgrades and revised expectations

Analysts are starting to adjust their outlook on Nvidia [4]. HSBC downgraded Nvidia’s stock rating from ‘buy’ to ‘hold’, significantly lowering the target price from $175 to $120 [4]. This revision reflects concerns about potential slowdowns in CSP (Cloud Service Provider) capital expenditure in fiscal year 2026 [4]. Uncertainties surrounding long-term demand from key players like DeepSeek also contribute to the more cautious stance [4]. These downgrades signal a shift in sentiment, prompting investors to reassess Nvidia’s growth prospects [GPT].

broader market carnage

The tariff war’s impact extends beyond chip stocks. Thursday witnessed a broad market sell-off, with the S&P 500 and Dow Jones experiencing their largest single-day drops since June 2020 [6]. The Nasdaq also suffered its biggest decline since March 2020 [6]. The S&P 500 closed down 4.84%, the Dow fell 3.98%, and the Nasdaq dropped 5.97% [6]. The Russell 2000 index officially entered bear market territory [6]. The ‘Magnificent Seven’ tech stocks collectively lost approximately $1 trillion in market value in a single day [6].

expert opinions and market outlook

Analysts are warning about the potential for continued volatility [7]. The trade war introduces uncertainties regarding costs, supply chains, and overall demand [4]. Bernstein analysts noted that while reciprocal tariffs are temporarily waived, a 10% baseline tariff could still impact companies [4]. As the trade war drags on, investors should expect further market turbulence and谨慎地 approach chip stocks [GPT]. The coming weeks will be crucial in determining the long-term consequences of these tariffs [GPT].

Bronnen

chip tariffs stock sell-off