If you closed your eyes for a little over a month, you might have missed the bear market.
The tech-heavy Nasdaq Composite (^IXIC) has nearly wiped out all of its losses so far this year as markets rebound on a 90-day tariff pause between the US and China that dropped duties by 115 percentage points.
While tech stocks are rallying across the board, Wedbush analyst and tech stock watcher Dan Ives sees one clear winner in the easing of trade tensions.
“It would have to be Nvidia,” Ives told Yahoo Finance in an interview just before the chipmaker’s market capitalization broke above $3 trillion for the first time since February. According to Ives, the broader tariff relief rally in tech, coupled with an artificial intelligence investment cycle that remains intact, creates a “dream scenario” for the AI chip leader.
Nvidia stock (NVDA) surged over 5% on Monday following the US-China deal and by as much on Tuesday, though shares are still down 3% year to date.
“I think [the stock] makes … new all-time highs because there’s only one chip in the world fueling the AI revolution, and that’s led by [the] godfather of AI, Jensen, and Nvidia,” Ives said.
Nvidia CEO Jensen Huang is currently in Saudi Arabia alongside dozens of tech executives for a dealmaking bonanza led by President Trump as part of his first major foreign trip in his second term.
The lift in Nvidia stock can be partly explained by the US granting Saudi Arabia more access to advanced AI chips, buoying the Gulf nation’s ability to purchase high-powered semiconductors. On Tuesday, Nvidia announced it will ship 18,000 chips to an AI startup owned by Saudi Arabia’s sovereign wealth fund.
One potential concern with selling cutting-edge chips to Saudi Arabia is that those chips could then be smuggled to China, bypassing US export controls. The Trump administration tightened some restrictions targeted at China, but it’s also looking to overhaul regulations on AI chip curbs.
Brian McCarthy, chief strategist at MacroLens, argued that curbs on chip exports to China are tough to enforce.
“It’s just very, very hard to put a net around this stuff,” said McCarthy, adding, “The Chinese are very diligent. They have a very good network of ways to move products underground … for all kinds of products.”
National security issues notwithstanding, if China can use indirect chip purchases to work around export controls, that could be a boon for Nvidia shareholders.
“It shows it’s not just about China,” Ives said. “This just shows what I believe is going to be happening over the coming years — the trillions being spent on AI.”
Another big winner: Apple
According to Ives, Nvidia isn’t the only big winner from the US-China truce.
In its earnings report earlier this month, Apple (AAPL) estimated it would face a potential $900 million hit due to tariffs.
That headwind could be mitigated if the US and China strike a deal to permanently reduce tariffs. But even if tariff rates stick, Lou Basenese, executive vice president of market strategy for Prairie Operating Co., isn’t too concerned.
“$900 million is really, really a rounding error,” Basenese said of the $3 trillion company.
Read more: What Trump’s tariffs mean for the economy and your wallet
Despite the bullish attitude in tech stocks and the broader market, McCarthy urged caution ahead, as businesses “are still going to have to struggle with this issue of whether they’re comfortable leaving their supply chains running through China in a big way.”
“I think they’re going to find that they’re not [comfortable],” McCarthy said. “So they’re still going to incur, I think, a lot of expense in having to figure out how to move those supply chains.”
To be sure, any deescalation of the triple-digit levies may be a win for businesses and consumers in both nations, according to Bonnie Glaser, the managing director of the German Marshall Fund’s Indo-Pacific Program.
Glaser said that over the past couple of weeks, trade between the US and China ground to a halt.
“Shipping containers aren’t leaving China, and we are about to see real shortages in the United States because of goods not arriving from China,” Glaser said. “So it really is a win for the people of both sides.”
But amid the lingering uncertainty, Greg Valliere of AGF Perspectives argued that the end of this battle doesn’t mean the trade war is over.
“I’m happy to see this agreement, and I’m happy to see the markets up, but I think we still have a long way to go before there’s a deal,” Valliere said.
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