Strong growth followed by an unexpected downturn caused by external factors. The last few months have been a rollercoaster ride for Nvidia, making it harder than ever to predict the company’s future despite huge demand for its artificial intelligence chips. During 2024, Nvidia’s stock soared, jumping 174% over twelve months. However, it was not the company’s wrong decisions that changed the game, but the strategies of the US government and, in particular, the resumption of the trade war between the United States and China.
The latter is a crucial market for Nvidia, which, considering the tariffs imposed by Trump, could risk losing around $5.5 billion. Although the outlook for the coming months is almost impossible to predict, the company founded in 1993 by Chris Malachowsky, Curtis Priem and current CEO Jen-Hsun Huang is redrawing its roadmap to plan investments, choices and business directives to remain at the top of its market segment.
Investments and production in the US
The first change, of course, concerns the domestic market because, as requested by the new American president, Nvidia has announced that it will produce supercomputers for artificial intelligence in the United States. Moving the production chain from Asian countries means having to cope with a sharp increase in costs, as labour and all other items require a higher outlay than expected when operating in China. Nvidia is currently collaborating with Foxconn and aims to invest up to $500 billion over the next four years to create AI infrastructure.
To build and test its Blackwell chips, the Santa Clara-based semiconductor company has commissioned TSMC (Taiwan Semiconductor Manufacturing Company, the world’s largest independent semiconductor manufacturer) to build a production facility covering over 90,000 square metres in Arizona, while Texas has been chosen as the base for AI. Specifically, Nvidia wants to build a plant in Houston with Foxconn and a factory in Dallas with Taiwanese company Wistron. In both cases, production will start within the next 12-15 months.
The experiment with El Salvador
The impossibility of looking to China has prompted Huang to come out into the open: ‘This is a very important market for us and we hope to continue working together.’ These words were spoken in the aftermath of the restrictions imposed by the authorities on trade between American companies and Chinese customers, such as DeekSeek. The US government’s stance is forcing the US company to find alternative ways to expand its network and maintain its leadership in the field of AI chips. This is where Nvidia’s partnership with El Salvador comes in, a country that aims to emerge as a hi-tech hub in Latin America.
After betting on cryptocurrencies with huge investments in Bitcoin, the country led by Nayib Bukele intends to exploit the potential of AI to develop and improve several crucial sectors, such as education, healthcare and industry. While on the one hand, there is a desire to experiment on the part of a country eager to gain space, visibility and investment thanks to Nvidia’s know-how and expertise in supercomputers, for the US company, there is an opportunity to develop a digital infrastructure for a nation, with the aim of creating a model that could potentially be replicated elsewhere. This is an important challenge for Nvidia and AI in the present and future.
Despite the rollercoaster ride on Wall Street, the rise in share prices reflects Nvidia’s capabilities. After becoming the benchmark company for being the first to bet on the AI boom, the company seems ready to find alternative solutions to the impossibility of exporting products to China. And this is perhaps the most important aspect of ensuring a bright future in difficult times.
