Nvidia (NVDA) stock dropped as much as 3% Tuesday morning before paring losses as the Trump administration’s new tariffs dragged markets.

President Donald Trump imposed 25% tariffs on Canadian and Mexican imports on Tuesday as well as a 10% duty on Chinese imports.

Nvidia’s drop extends declines over the past week, with shares down more than 10% over the past five trading sessions.

While semiconductors aren’t directly affected by the new tariffs, Bernstein analyst Stacy Rasgon wrote in a February analysis, when news of the tariffs first emerged, that the duties would affect imports of data processing equipment, such as servers using AI chips. For example, Nvidia customer and contract manufacturer Foxconn is building the world’s largest factory for assembling servers with Nvidia's Blackwell AI chips in Mexico, one of the three countries hit by tariffs. Higher prices of those products could reduce demand and have an indirect effect on chip sales.

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Nvidia on Monday tumbled 8.7% to close at its lowest level since September. The drop followed a report from the Wall Street Journal that its latest Blackwell AI GPUs are reaching China despite export controls, reigniting investor fears of a further tightening of US trade restrictions on the chips.

Rasgon wrote in a note to investors Tuesday of Nvidia: “The stock (along with many of its AI-semi peers) has suffered, battered by a storm of growth fears, supply chain noise, and tariff and regulatory risks.”

He noted that “NVDA’s China sales, while reaching record levels (~$17B in FY25), are at the lowest % of revenue (13%) in the last 10 years,” softening the blow of any potential future stiffening of export controls.

“[W]orries that the AI trade is “over” feel a little premature to us, and [Nvidia’s] valuation is getting increasingly attractive,” he wrote, maintaining his Buy rating and $185 price target on the stock. 

Citi analyst Atif Malik also maintained his Buy rating on Nvidia, writing in a note to investors Tuesday of the stock's selloff, "While risk-reward looks attractive on the stock with stock trading below historical troughs, we believe investors are looking for the clearance event on the overhang from the AI restrictions and tariff impact to gross margins."

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.

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