Even a fleeting handshake can drive the stock market into a full-blown bear hug when it comes to international trade. That’s precisely what occurred when chipmakers such as Nvidia heard about a tariff timeout between China and the U.S. Suddenly, semiconductors aren’t merely circuits, they’re peace offerings, and investors are buying them up like limited edition sneakers.

Semiconductor shares jumped  Monday morning after it was announced that the U.S and China will reduce most tariffs as they negotiate a more comprehensive trade agreement. Nvidia, the U.S’s largest chipmaker, jumped 4.1% to $121.42 in early trading, a sharp response to what markets are interpreting as a temporary ceasefire in the raging trade war.

Chip Stocks Upsurge

The optimistic sentiment spilled over into Nvidia. The iShares Semiconductor ETF rose 6.7%, and Intel gained 3.1%. Marvell Technology rose 7.3%, and Super Micro Computer, a leading provider of AI-server suppliers, gained 7.6%. On the other hand, the Nasdaq Composite Index rose 3.5% on the news.

As per Treasury Secretary Scott Bessent, the two economic giants will cut tariffs dramatically for 90 days, giving room to breathe for more talks. Investors took the news as a good sign that the worst case trade possibilities of triple-digit tariff rates and supply chain embargos, might be put on hold for now.

The Rules tend to Pay

In a research note, Melius Research analyst Ben Reitzes wrote,

“As tariffs and the China situation becomes more clear, Nvidia gets much more investable. Knowing the rules will help.”

He has a Buy rating on Nvidia with a $150 price target, applying a 23x earnings multiple to fiscal 2028 estimates. Nonetheless, despite this boost, Nvidia is also making changes. DigiTimes reported from Taiwan that the chipmaker has raised GPU prices by as much as 25%, to make up for lost Chinese business and increased U.S production costs.

Industry’s Strategic Challenges

Even with the rally, the problems of the chip sector persist. The rolling back of the tariffs for the time being does nothing to mitigate the long-term pressure on semiconductor sales to China. High-end chips for artificial intelligence remain banned, and most of Nvidia’s top chips fall in this bracket. In addition, although certain tech components, including smartphones and PCs, had previously been exempt from reciprocal tariffs, but White House officials have suggested that semiconductors will be subject to new sector-specific tariffs in the near future. Secretary Bessent affirmed on Monday that these remain on the table, describing them as “strategic necessities” like tariffs on steel and pharmaceuticals.

A Relief and Not a Resolution

Nvidia and its semiconductor peers might be getting a breather, but the path forward isn’t entirely charted. Tariffs are maybe subsiding for the moment, but strategic export controls and the danger of industry-specific tariffs that loom larger than ever have casted a long shadow over the industry. Though Monday’s chip-stock rebound indicates the market’s hunger for certainty, investors need to avoid confusing fleeting diplomacy with durable policy. For investors, the recent rebound is a source of relief, not resolution.