Nvidia stock does seem to be an underdog in boxing, struggling underneath but fighting back. Nvidia shares have fallen under considerable pressure due to the new U.S tariff imposition and associated market turbulence. With tariffs rocking the market and analysts downgrading their outlook, one would think this should be a complete knockout. Fortunately, Bank of America is still betting big on this AI chip leader, asking investors to stay in the ring for what would be a comeback story.

It claims long-term confidence in the chipmaker’s future, issuing an optimistic estimate for the stock, contrary to other firms downgrading it. After all, Nvidia’s true power lies not only in its chips but also in its vast growth potential in artificial intelligence.

Markets Crash with the Tariffs Shake

The U.S economy and global markets are under pressure ever since President Donald Trump announced reciprocal tariffs of at least 10% for many countries on April 2. The S&P 500 dropped 10% over the next two days, while the tech-heavy Nasdaq composite plunged by 11%.

Economists and strategists are predicting that the high tariffs will shrink revenues to American consumers and businesses as the prices of foreign goods shoot up. Ashish Shah, Chief Investment Officer of public investing at Goldman Sachs, on April 3 said,

“We view this as kind of a growth shock… this is going to be a hit to U.S consumers.”

The White House has acknowledged that semiconductors would not be part of the tariff list, yet investors are still alarmed that the disturbance will have a ripple effect across electronics manufacturing and the demand throughout the tech sector.

Hit to the Semiconductors Sector

On 3rd April, the Philadelphia Semiconductor Index (SOX) dropped nearly 10%, leaving behind a 5% drop on the S&P 500. The following day, SOX lost another 7.6%, and the index drop dragged Nvidia, a pioneer in the AI chip market, down by over 14% in two days.

After the declines, analysts at HSBC downgraded Nvidia, mentioning reduced pricing power for GPUs and continued supply chain issues. It was one among several firms on Wall Street revisiting their projections on the rapidly changing trade environment.

Nvidia’s Pre-Tariff Struggles

Even before the tariff announcement, Nvidia faced a range of obstacles. Its stock had fallen almost 20% in Q1 2025 due to disappointing earnings, macroeconomic volatility, and rising competition, particularly from the lower-cost AI model DeepSeek from China. The company’s revenue grew aggressively, but the year-over-year increase slowed to 78% in Q4 2024, down from triple-digit gains posted in previous quarters. Gross margins shrank as well, going to 73.5% in the last quarter, compared with 76.7% a year before. Nvidia cited significant costs associated with the introduction of new Blackwell data center chips as the main cause.

Given that the company’s supply chain is mainly in the Asia-Pacific region and supports partners like Taiwan Semiconductor Manufacturing Company (TSMC), Nvidia exposes itself to the risk of geopolitical instability. CEO Jensen Huang, however, modulated the near-term impact of tariffs, stressing that the company would boost onshore manufacturing over time. Huang said,

“Tariffs will have a little impact for us short term.”

Bank of America Remains Optimistic

Despite the challenges, Bank of America holds its optimistic position and continues to support Nvidia among its other best semiconductor choices. In a research note with the analyst Vivek Arya, other firms mentioned are Broadcom (AVGO), Lam Research (LRCX), and Cadence Design Systems (CDNS), which are all seen to be well-positioned in the current market headwinds.

The analyst stressed that although there is no immunity from tariffs, strong balance sheets with exposure to growth areas such as AI, cloud and complex computing would be better in handling and surviving the current storm. Arya noted that AI spending should remain relatively strong among major U.S cloud providers, as Meta and Microsoft are key customers of Nvidia that have very deep pockets.

Besides pricing power and product leadership with Nvidia, the newly proposed supply chain restructuring could further its advantage with potential on-shoring of chip production. Other U.S based manufacturers such as Intel (INTC), Texas Instruments (TXN), GlobalFoundries (GFS), and Wolfspeed (WOLF) may also stand to benefit from this new trade arena that is being formed.

Compelling Valuation despite the Crash

Nvidia’s stock closed at $94.31 on April 4, down about 30% year-to-date. Bank of America maintained a “Buy” recommendation in a separate note from March 26, arguing that this is one of the rare stock entry points. Arya said,

“We believe the stock is providing a particularly attractive opportunity for one of the most unique, high-quality tech franchises leading the largest and fastest growing secular trends.”

At any rate, Nvidia appears to be limping through the ongoing selloff rather than crawling. On the other hand, Bank of America puts an optimistic view on the chipmaker, but it is a calculated bet patiently laid upon Nvidia’s dominance in AI and long-term survivability. As, it truly is difficult to bet against a company that is not just riding the AI wave but essentially making it.

Tariffs may bring a pause, but as long as innovation remains in fashion, it is not the end of Nvidia. While the tariff issue remains a concern and the tech sector adjusts to a new economic paradigm, Nvidia’s fortunes may depend on how fast it can adapt its production facilities and how long investors will put up with its excuses.