NVIDIA's Crossroads: Trade Barriers and Market Sentiment Trigger Strategic Sell-Off

The decision by veteran investor Steve Weiss to offload half of his NVIDIA (NVDA) holdings in 2025 marks a pivotal moment for the AI chip giant. Amid escalating trade tensions, weakening corporate spending, and a bearish market outlook, Weiss’s move signals a growing skepticism about NVDA’s near-term prospects—even as its long-term role in the AI revolution remains undeniable.

Trade Restrictions: A Self-Inflicted Wound?
The first catalyst for Weiss’s sale was the U.S. government’s decision to restrict exports of NVIDIA’s advanced H20 AI chips to Chinese tech giants like Alibaba and ByteDance. These rules, imposed under the Trump administration, forced NVDA to write down $5.5 billion in unsellable inventory—a stark reminder of geopolitical risks in global supply chains. Analysts at Bank of America estimate these restrictions will reduce NVDA’s fiscal 2026 sales by 5–8% and EPS by 6–10%.

The consequences are already visible. China, once responsible for 20% of NVDA’s data center revenue, now sees its market share halved. CEO Jensen Huang admitted to “reduced sales prospects,” a rare acknowledgment of vulnerability from a leader synonymous with AI dominance.

Corporate Spending: The Cloud Over Cloud Infrastructure
Weiss’s second concern centers on a broader slowdown in corporate IT spending. Major cloud providers—Amazon, Microsoft, and Google—are scaling back capital expenditures amid inflationary pressures and trade-related costs. These firms are NVDA’s largest customers for AI-driven server chips, and their retrenchment directly impacts NVDA’s revenue pipeline.

The ripple effects are measurable. Servers powered by NVIDIA’s chips underpin AI models like those of OpenAI and Alibaba’s Tongyi, but delayed spending on infrastructure has stalled adoption. This aligns with data showing a 15% drop in global cloud infrastructure investments in Q2 2025—a trend likely to persist.

Market Sentiment: Bearishness and Bargain Hunting
Weiss’s bearish outlook extends beyond NVDA’s fundamentals. He argues that the broader market remains fragile, citing lingering uncertainty over trade policies and inflation. While NVDA’s P/E ratio of 20 appears attractive compared to its AI peers, Weiss sees better opportunities elsewhere. He pointed to an unnamed AI stock that rose 30% in 2025 while NVDA and Avago Technologies (AVGO) fell ~25%—a divergence he attributes to mispricings in the sector.

The Contrarian Case for NVDA
Not all investors share Weiss’s pessimism. Tom Plumb, a long-term tech bull, argues that NVDA’s role in the “digital revolution” justifies its valuation. He highlights its $40 billion R&D pipeline and its leadership in generative AI tools like Omniverse. Yet even Plumb concedes that near-term headwinds are real.

Conclusion: Prudent Exit or Premature Sell-Off?
Weiss’s decision is a calculated hedge against three converging risks: geopolitical friction, corporate austerity, and macroeconomic uncertainty. With NVDA’s writedown wiping out $5.5 billion in potential gains and analysts forecasting a 7% EPS hit next year, his caution is statistically sound.

However, NVDA’s long-term narrative remains intact. Its AI ecosystem, from chips to software, underpins industries from healthcare to autonomous vehicles. The question is timing: Will investors endure short-term pain for a 20–30% upside in 2027, or pivot to cheaper AI stocks trading at 5x earnings? For now, Weiss’s exit—coupled with the market’s current aversion to volatility—suggests the latter.

The verdict? NVDA’s fundamentals are strong, but its near-term trajectory is clouded. Until trade policies stabilize and corporate spending rebounds, the sell-off may continue. As Weiss put it: “The bearish sentiment… has not changed.” For now, patience—or prudence—seems the only profitable move.