Why AMD and NVIDIA shares are down today

Advanced Micro Devices (AMD) and NVIDIA (NVDA) shares have fallen today. At 9:15 am, the AMD stock was down from $ 30.87 to 1.84%, while that of NVIDIA was down 1.38% to $ 165.20. Dow Jones futures also fell by more than 200 points, while futures on the S & P 500 and Nasdaq fell respectively by 18 and 46 points.

The stocks of chips fell after Donald Trump advanced with more tariffs on Chinese products. On Sunday, Trump hit China with additional duties of 15 percent on imports worth $ 110 billion. He also announced tariffs of 15% on Chinese goods of about 160 billion dollars as of December 15. In addition, US law on Chinese goods of approximately $ 250 billion is expected to be increased to 30% on October 1.

Rates hit AMD and NVIDIA shares

In addition to harming consumers, tariffs are expected to hurt high-tech companies, including semiconductor companies such as AMD and NVIDIA. The two leading chip vendors for the gaming graphics card market, AMD and NVIDIA are assembling their graphics cards in China. The tariffs on Chinese products would increase the prices of the PC graphics cards, which could seriously harm AMD and NVIDIA. Stocks of semiconductors and chips would generate more than 50% of their revenues in China.

NVIDIA is already struggling with slower gaming sales. Over the past three quarters, NVIDIA's game sales have declined with the demand for cryptocurrency. Its game sales dropped 27% year-over-year (year-over-year) in the second quarter. The slowdown in China has also weighed on sales of its expensive GeForce RTX 2060 graphics card for PC gaming.

Tariffs on imports from China could jeopardize NVIDIA's acquisition of Mellanox. The agreement, which has not yet been approved by China, would have helped NVIDIA grow into the profitable data center market. AMD's sales also suffered in the second quarter due to lower sales in the graphic and semi-custom channels.

AMD competes with NVIDIA in gaming

NVIDIA, while a leader in the discrete GPU market, faces AMD's fierce competition in gaming. AMD took market share from NVIDIA after launching its Navi GPU at 7 nm (nm). Some experts believe that AMD's Navi GPUs are better in terms of price and performance than NVIDIA's RTX 2070 GPUs.

Jon Peddie Research reports that AMD surpassed NVIDIA for the first time since 2014 in the GPU market in the second quarter. AMD's GPU shipments increased 9.8% sequentially during the quarter, while NVIDIA GPU shipments were stable. In comparison, GPU shipments from rival Intel dropped 1.4% in the second quarter.

AMD and NVIDIA are preparing to launch new products in the coming months to gain market share. However, the intensification of trade tensions could affect the graphics card shipments of both companies.

Could AMD and NVIDIA shares continue their rally?

Despite fears of a trade war, AMD and NVIDIA shares have followed an upward trend this year. By August 30, AMD share had grown more than 70% this year, while NVIDIA had grown 25.8%. AMD's launch of the EPYC Rome 7 nm server processor in early August caught the attention of institutional investors. AMD's progress in the processor market (driven by Ryzen and EPYC) and the GPU market for data centers could drive up its stock.

NVIDIA is also gaining ground as many institutional investors have also increased their holdings in the company. It relies heavily on its new generation RTX ray throwing chips to compete in the computer graphics industry. NVIDIA also embraces GPUs in data centers and automotive space to drive growth.