Nvidia (NVDA) Dominance ‘Under Threat’ as Long Term Damage of Trump Tariffs Makes Asia Turn to China

Investors have been warned that they can’t rely on U.S. tech stocks like Nvidia (NVDA) spearheading a sustained stock market rally because of the long-term damage caused by President Trump’s tariff trade strategy.

Exuberance May Not Last

Kathleen Brooks, research director at XTB, said the initial “exuberance” of the last few days as the U.S. and China made progress on trade talks and slashed the rate of tariffs between the two countries could mask a bigger issue for U.S. stocks.

The news yesterday sent stock markets up as investors moved away from safe haven assets such as gold to riskier assets such as equities. U.S. tech stocks performed particularly well, with Nvidia ending the day up 5.4%, Microsoft (MSFT) up 2.4%, Meta Platforms (META) 8% better off, and Apple (AAPL) 6% stronger.

These, of course, form part of the Magnificent Seven which has powered U.S. stock markets higher over the last few years.

However, Brooks said there were question marks over whether they could continue “providing legs to the rally” over the near and long term. She said Nvidia was particularly vulnerable in the months to come.

Chinese Keep Innovating

“There has been existential angst around the threat of Deepseek for most of this year, which has weighed on Nvidia’s share price, which is still lower by 10% YTD, even though the narrative around tariffs has shifted,” she wrote.

Brooks warned that even with better trade relations between the U.S. and China, the recent trade embargo between the two nations may entice even more Chinese innovation into the area of AI and chip technology, which could threaten the dominance of Nvidia.

“China is developing its own chips with Huawei and Alibaba (BABA). These chips could penetrate more than just the Chinese market, with potentially the entire Asia region looking to diversify away from U.S. for the most advanced tech components,” she said.

Indeed, due to the size of the U.S. tech sector, she said this could hinder the ability for U.S. stocks to outperform this year, even if they are in recovery mode right now.

Which Stocks are Most at Risk from Tariffs?

We have rounded up the stocks most at risk from Tariffs using our TipRanks comparison tool.