This was a brutal year for the American technological industry as a combination of challenges, ranging from political uncertainty to foreign competition, has shaken some of its fundamental hypotheses. Globalism is no longer guaranteed and market development like China goes from a low-cost source of workforce in a viable threat to American technological domination.
The next 12 months could be a makeup period to Nvidia (Nvda 2.91%)) While sailing in the evolving macroeconomic landscape. Learn more deep to decide how the actions of the company could work.
Globalization could be dead. What comes next?
Although it is too early to be sure, the price announcement of President Donald Trump can mark the start of the end of globalization – a system that facilitated increasingly complex international supply chains. NVIDIA is a typical example of the operation of globalized trade models.
As destroyed semiconductorNvidia only conceives of her chips. Their actual production is outsourced to foreign companies such as TAIWAN semiconductor manufacturing (TSMC), who produces them with the help of EUV machines from the Dutch company ASML.
These international interdependencies could attract unwanted political attention. But the good news is that Nvidia worked to pre -empt this exhibition using its manufacturing partners.
At the end of 2024, TSMC opened its first American factory in Arizona, allowing Nvidia to source in the cutting -edge of Blackwell AI at the national level. This decision could protect the company from potential prices, which is essential for its long -term success. Even if semiconductors are currently exempt from this last tariff cycle, their strategic nature will probably attract the attention of this administration and future American legislators, it is therefore advantageous for Nvidia to get ahead of this potential front wind.
China and India are also looking for the relevance of AI
Although Trade War Talk steals the show in April, the Nvidia stock prices started in January, the launch of highly efficient Chinese Great language model (LLM) Deepseek V3, which would have been developed for only $ 6 million. Although the real cost is still strongly debated, it is believed that V3 has been built using much less advanced H800 chips while comparing favorably to American LLMs like the Openai Chatppt, which have been built with much more expensive equipment.
Image source: Getty Images.
Deepseek calls into question the amount of money that American companies of AI spend on Nvidia equipment. And while the main customers love Meta-platforms Continue to dive money in the opportunity, this can be a matter of time before facing a shareholder’s counterpoup to the amount spent for a minimum financial reward.
In April, an Indian start-up called Ziroh Labs added even more uncertainty to the US AI market with the release of KOMPACT AI, a system designed to execute LLM without advanced Graphic processing units (GPU) manufactured by companies like Nvidia. Inference (the process where an AI model uses its knowledge formed to generate an output) represents an important source of demand for Nvidia equipment. KOPACT AI aims to facilitate this process using less expensive central treatment units (CPU), which are widely available on consumption devices such as computers and computers.
What could the next 12 months for Nvidia reserve?
Over the next 12 months, NVIDIA should face substantial volatility. Even if the company seems relatively isolated from the direct impacts of the trade war, this does not prevent investors from jumping from ships. Competition at low cost from China and India also begins to question the importance of its most advanced (and most expensive) GPUs for competitive training and management of LLMs.
With a prices for term remuneration (P / E) multiple of 25, the current NVIDIA evaluation is relatively low for a company that has increased the profits of the fourth quarter by 80% from one year to the next. This discount is already prices in a large part of uncertainty. However, investors may want to wait for the stock to fall more deeply in the territory of occurrence before considering a position.
The events of early April made it a market for fear and uncertainty. And until it changes, the fundamentals can take the back seat.
Randi Zuckerberg, former Director of Development of the Facebook and Sister of the CEO of Meta Platforms, Mark Zuckerberg, is a member of the board of directors of Motley Fool’s. Will Ebiefung Has no position in the actions mentioned. The Motley Fool has positions and recommends ASML, Meta Platforms, Nvidia and Taiwan Semiconductor Manufacturing. The Word’s madman has a Disclosure policy.