Nvidia is currently under great market pressure, as in the past month alone, the stock fell 8.5%, and in the last quarter, it has nearly gone down by 30%. Bearish comments from analysts are causing further pessimism due to lingering worries regarding fading demand from China, which constituted about 13% of Nvidia’s revenue in 2024.

Guy Adami and Dan Nathan, traders on CNBC’s Fast Money, weighed in with more cynical perspectives. Adami said,

“Nvidia continues to trade poorly and encouraged investors to consider selling”.

Nathan was even more blunt, cautioning that stock prices may have to be cut by as much as 50% if there is an inventory backlog on account of export restrictions imposed due to the U.S government’s actions.

Tariff Fears & Export Ban Effects

The primary concern is the more stringent restrictions of U.S exports that affect the ability of Nvidia to sell advanced AI chips to China. In view of emerging geopolitical tensions and increasing tariff rhetoric ahead of the U.S presidential elections, the macro headwinds have begun to blow even more strongly.

Analysts are now worried about the effect of the various restrictions on Nvidia’s earnings growth, particularly if large customers in China slow down or cancel orders. The matter is further aggravated by volatility in the larger markets, along with fears of a possible correction in the entire tech sector.

SK Hynix Brings a Ray of Hope

However, even with heavy economic despair, Nvidia’s supply chain tells a tale filled with hope. This week, SK Hynix of South Korea, a major supplier of Nvidia’s High Bandwidth Memory (HBM), which is used in AI chips, released news of jaw-dropping earnings.

In the first quarter, SK Hynix declared that HBM3E had propelled extraordinary sales, which saw a 42% year-over-year revenue increase. SK Hynix bestows enormous importance to the cutting-edge 12-layer version, especially built for AI workloads like the ones run on Nvidia’s accelerators, for the second quarter, forecasting that over half of its HBM3E revenue would come from it. Despite increasing trade friction, SK Hynix continues to keep its sales pipeline with Nvidia intact. Sales are expected to almost double in 2025 as far as HBM shipments are concerned, compared with the previous year.

AI Demand

The optimistic prediction from the company SK Hynix suggests that there are still enterprise and hyperscale customers pushing their dollars into the next generation AI infrastructure, even if Nvidia’s stock performance doesn’t reflect it in the near term. On the other hand, the likes of Meta, Microsoft, and Amazon have been racing to enhance their AI training capacities using Nvidia chips.

SK Hynix stated during its earnings call,

“Despite global uncertainty, we will maintain our sales strategy and support customer needs through close collaboration within our supply chain”.

The company also indicated that possible tariff related demand softening during the second half may occur, but this would not affect any existing contracts.

Investor Perspective

While Nvidia struggles through this short-term sentiment, the market seems to be divided in the pessimism over the regulatory risk and the optimism around the long-term potential of AI. Such a mood swing from Wall Street and the optimism of SK Hynix highlights this contradiction.

Clearly, the fate of Nvidia may depend less on headlines and much more on the quality of execution, how the company tackles the export restrictions and at the same time is able to serve a sizzling hot AI demand in other markets. For now, there are really reasons for investors to be cautious but at this stage they should not completely count out Nvidia yet.