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Nasdaq's Rollercoaster: How Trump's Tariff Games & Nvidia's AI Bet Will Redefine Tech's Future

Research Strategist

Feb 4, 2025

When Trump’s tariff hammer collides with Nvidia’s AI holy grail, investors face a choice: bet on the invincibility of U.S. tech dominance or acknowledge that geopolitics has become a new pricing factor.

The Nasdaq has tumbled from its record-high euphoria, opening 2.6% lower and breaking below the 50-day moving average on Monday, but managed to recover all its losses by the close, marking a sharp intraday sentiment reversal. This is more than just a technical rebound—it reflects institutional investors' tough decision-making amid the uncertainty of Trump’s policies.

While the bulls showed strong momentum during the session, the index still faces near-term pressure, with two key catalysts ahead: Trump’s push for chip tariffs and Nvidia’s earnings report on February 26.

The primary driver behind the bullish comeback was Trump’s sudden shift in his tariff stance. His announcement on Saturday triggered a broad risk-off move, sparking a global sell-off in risk assets, including U.S. equities. However, his latest statement delaying tariffs on Mexico and Canada for a month. This kind of "signalling left but turning right" move undoubtedly calmed market jitters, provided a much-needed boost to equity traders, reversing the Nasdaq’s short-selling trend.

That said, beyond the broader market relief from tariff adjustments, the tech-heavy Nasdaq still faces unique challenges. The White House’s ongoing discussions on tightening restrictions on Nvidia’s China sales, the investigation into whether DeepSeek is acquiring Nvidia chips through Singapore, and Trump’s aggressive stance on a 100% tariff for semiconductor chips have all added fuel to the fire. With Nvidia struggling below the critical $127.8 resistance level, the Nasdaq is unlikely to find firm footing anytime soon.

Last week’s earnings reports from the “Magnificent Seven” were mixed at best. Aside from Meta’s strong performance, Microsoft’s cloud business slowed, Tesla’s results fell short on both EPS and revenue, and Apple’s China sales showed no signs of recovery—all weighing on sentiment.

If the threat of chip tariffs materializes, surging costs in raw materials and logistics restructuring for semiconductor firms and potential retaliatory measures from China could keep the Nasdaq under pressure in the near term. Moreover, heightened market uncertainty could accelerate risk-off flows, putting high-valuation tech stocks at the forefront of the sell-off. Conversely, if Trump’s actual implementation of chip tariffs turns out to be milder than expected, the market’s fear-driven reaction may quickly subside, allowing the Nasdaq to regain its upward momentum.

While Google's and Amazon's upcoming earnings reports, along with the non-farm payroll data, may cause some market fluctuations this week, I believe the key driver for Nasdaq's trading trend will ultimately be Nvidia’s Q4 earnings report—it’s a critical test.

Key factors to watch include gross margins, revenue, data center growth, and performance guidance—particularly management’s outlook on demand. If Nvidia’s report reaffirms its technological edge and strong chip demand, it could restore market confidence and lift the Nasdaq. On the other hand, if Nvidia signals that DeepSeek poses a credible competitive threat or that tightening U.S. export restrictions on China could materially impact its revenue, the Nasdaq may face another leg down.

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