Legendary Investor Brad Gerstner Is Buying Up Nvidia Stock Despite the Trade War Tizzy. Should You?

Globe and Mail

10-04-2025

In early April, the United States announced broad global import tariffs, which the markets quickly dubbed the 'Liberation Day' tariffs. These tariffs sent shockwaves throughout the technology sector, and Nvidia (NVDA) was no exception, with its stock coming under heavy selling pressure.
Investors found some relief on April 9, when President Donald Trump announced a 90-day pause on higher reciprocal tariffs, with the exception of China, which now faces a 125% import tariff. Along the way, some influential market players remained confident in Nvidia's resilience.
Brad Gerstner, CEO of Altimeter Capital and one of Wall Street's respected tech investors, recently made headlines by expressing his firm belief that Nvidia is uniquely positioned to weather Trump's tariff storm. Gerstner cites not only Nvidia's leadership in AI chips, which power everything from ChatGPT and autonomous vehicles to massive data centers, but also recent reciprocal tariff exceptions specifically granted to semiconductor imports.
These exceptions, Gerstner suggests, signal recognition by policymakers of the critical role advanced chips play in maintaining America's competitive edge in the AI arms race.
This article explores Brad Gerstner's thesis in depth, analyzing Nvidia's fundamental strengths and its exposure to tariff-related risks. Should investors keep buying NVDA stock, or is caution now the better path forward? Let's dig deeper to find out.
About Nvidia Stock
Nvidia (NVDA) is a premier technology firm known for its expertise in graphics processing units and artificial intelligence solutions. The company is renowned for its pioneering contributions to gaming, data centers, and AI-driven applications. NVDA's technological solutions are developed around a platform strategy that combines hardware, systems, software, algorithms, and services to provide distinctive value. Its market cap currently stands at $2.35 trillion.
Shares of the AI darling have slumped 14.9% year-to-date, pressured by concerns ranging from the emergence of DeepSeek to tariffs and uncertainties surrounding the global economic outlook.
Altimeter's Brad Gerstner Believes NVDA Is Well-Positioned Here
Altimeter Capital CEO Brad Gerstner said last Thursday that he's stepping out of the 'bomb shelter' with Nvidia and into a position of safety.
'That means adding about 15% of net exposure, and we're adding it in the areas that we believe are continuing to see sector growth. And as you know, the growth and demand for graphics processing units (GPUs) is off the charts,' Gerstner said. He highlighted the Nvidia's GPUs, which are fueling the AI boom, and noted that investors should pay attention to commentary from OpenAI, Google (GOOGL), and Elon Musk.
Gerstner believes Nvidia is well-positioned to weather President Donald Trump's broad tariff measures, a stance he shared even prior to the implementation of a 90-day pause. A major reason the chipmaker might better withstand Trump's tariff increases is that semiconductors are included in the list of exceptions - a move Gerstner described as a 'wise exception' given the significance of AI. 'And I think one of the reasons semiconductors are being excepted is because for us to charge a tariff on our own chips, which are fabricated in Taiwan because they can't be fabricated in the U.S. …because we know if we increase the cost of chips that we design to our own companies, we're only shooting ourselves,' he told CNBC.
It's important to clarify that by 'exceptions,' Gerstner is referring to those from reciprocal tariffs announced on 'Liberation Day,' April 2, when Trump unveiled a universal 10% tariff on all goods along with steeper country-specific duties. Semiconductors were excluded from these new U.S. tariffs, shielding Nvidia from some immediate direct costs.
Another important point to note is that the exemptions apply to semiconductors in their raw form, such as GPU boards, server accelerators, or integrated systems. However, numerous related items like circuit boards, fans, and power components continue to be included on the tariff list. As a result, this will likely lead to a margin squeeze if and when reciprocal tariffs resume, forcing Nvidia to choose between passing the added costs on to customers or absorbing them internally, either of which could hinder its growth. Still, investors shouldn't be overly concerned for now, as they received encouraging news on Wednesday. President Trump announced a complete 90-day pause on all 'reciprocal' tariffs, except those targeting China. U.S. trade partners will still be charged the baseline 10% rate.
Meanwhile, Nvidia will still feel some impact from reciprocal tariffs due to its exposure to China.
The country, initially hit with an additional 34% levy, serves both as a supplier of certain components and a notable end market, accounting for approximately 13% of the company's total revenue in FY25. Trade tensions between Beijing and Washington have escalated in recent days, as Trump raised the tariff rate on China to 125% on Wednesday, with immediate effect. The most recent hike followed China's announcement of additional retaliatory tariffs against the U.S. early Wednesday.
NVDA Continues to Face Risks from Chip-Specific Tariffs and Restrictions
Explicit threats from the Trump administration regarding future chip-specific tariffs create considerable uncertainty for Nvidia. Some analysts believe semiconductors were excluded from the reciprocal tariffs only because Trump is considering imposing separate, sector-specific tariffs on them.
Last Thursday, Trump told a White House press pool that tariffs on semiconductors would be imposed 'very soon.' In late February, Trump stated that he was considering tariffs of '25% or higher' on all semiconductor chips imported into the U.S., with rates expected to 'go very substantially higher over the course of a year.' In January, he proposed tariffs of 25%, 50%, or even 100% on semiconductors manufactured overseas.
Such tariffs could significantly affect Nvidia as the company outsources fabrication to partners in Asia. Taiwan is crucial because it hosts Taiwan Semiconductor Manufacturing (TSM), the contract foundry that manufactures Nvidia's latest silicon wafers. South Korea is also vital, serving as a source of memory chips from Samsung and SK hynix, and as an alternative wafer fabricator for some Nvidia products. In addition, Nvidia relies on subcontractors in Taiwan and other parts of Asia for assembly and packaging. Notably, the company cannot readily or swiftly relocate leading-edge production to other regions, as building a new fabrication facility and qualifying it for production typically takes up to 4 years.
Meanwhile, the U.S. government is also set to roll out its new tiered AI chip export restrictions on May 15, referred to as the AI Diffusion Rule. This framework seeks to regulate which countries, including U.S. allies, can import advanced semiconductors essential for AI development. It categorizes countries into three tiers and specifies the quantity of chips countries can import, where those chips can be used, and how nations can collaborate on AI development. With that, the rules would limit certain sales of Nvidia's chips and potentially shrink its market. Still, foreign governments and tech companies are reportedly urging the Trump administration to reconsider certain restrictions, expressing concerns that the rules could hinder AI development and investment.
NVDA Fundamentals Remain Indisputable
Setting the tariff drama aside for a moment, it becomes clear just how fundamentally strong NVDA's business truly is.
In the latest quarter, Nvidia reported impressive results that indicate significant potential for long-term growth. The company posted record fourth-quarter revenue of $39.3 billion, an increase of 12% sequentially and 78% year-over-year, surpassing both its own guidance of $37.5 billion and Wall Street's consensus of $38.2 billion. The bottom-line performance was equally strong, as adjusted EPS came in at $0.89, topping expectations by $0.04.
Riding the momentum of the ongoing AI revolution, the chipmaker saw its data center revenue, now accounting for 90.6% of total revenue, reach a record $35.6 billion in Q4, marking a 16% increase quarter-over-quarter and 93% year-over-year. Blackwell sales made up 31% of the data center segment, which management highlighted as the quickest product ramp-up in the company's history - unmatched in both speed and scale. CEO Jensen Huang recently stated that data center build-outs are projected to reach $1 trillion by the end of this decade, with hyperscalers purchasing Blackwell GPUs at unprecedented rates, underscoring NVDA's strong long-term growth potential.
Meanwhile, the company is actively making strategic moves to reinforce its dominant market position. On April 7, The Information reported that Nvidia had completed its acquisition of artificial intelligence startup Lepton AI. Notably, Lepton AI is renowned for its 'server-rental' services, which have seen surging demand recently due to their cost efficiency. It appears that the main reason for this acquisition is NVDA's effort to fully control the supply chain rather than just focusing on the manufacturing aspect.
Looking forward, Nvidia forecasts Q1 revenue to be around $43 billion, plus or minus 2%, representing a 65% increase year-over-year and a 9% rise from the previous quarter. This projection underscores ongoing robust demand for the company's products, especially the GPUs from the Blackwell series. Moreover, Nvidia has not experienced any significant downward revisions in FY26 revenue or EPS recently due to the new U.S. tariffs. Analysts tracking the company forecast a 51.42% year-over-year growth in its adjusted EPS to $4.53 for this fiscal year, while revenue is estimated to grow 56.37% year-over-year to $204.05 billion. The numbers are essentially the same as those in my article from last week.
Furthermore, NVDA's valuation looks like a gift. The stock is trading at a forward P/E ratio (Non-GAAP) of 21.29x, significantly lower than its five-year average of 47.75x. NVDA last traded at such a low P/E ratio prior to the launch of ChatGPT.
What Do Analysts Expect for NVDA Stock?
So far, Wall Street analysts have maintained their bullish stance on NVDA, with the stock holding a consensus 'Strong Buy' rating. This reflects their belief that Nvidia's dominance in AI will offset tariff-related headwinds over the medium term. Of the 43 analysts covering the stock, 37 rate it a 'Strong Buy,' two suggest a 'Moderate Buy,' and four assign a 'Hold' rating. The average price target for NVDA stock is $176.15, indicating solid upside potential of 54.1% from current levels.
The Bottom Line on NVDA Stock
I completely agree with Wall Street analysts and view Nvidia as a 'Strong Buy.' Although tariffs on China may lead to short-term supply chain disruptions and margin pressure, NVDA's dominant position in a rapidly growing industry puts it in a strong position to weather trade wars in the long term. Moreover, we received very encouraging news on Wednesday about reciprocal tariffs, increasing the likelihood that most of them will be reduced or averted through negotiations. One key aspect investors should watch closely is Trump's chip-specific tariffs, which I currently see as a major risk. Still, NVDA's current valuation provides a strong margin of safety against potential future risks. With that, 'Strong Buy.'