Can Nvidia's Jensen Huang Beat This Latest Challenge? Here's What History Says.

Nvidia (NASDAQ: NVDA) stock may have been at the top of the world a few months ago -- but these days, it's been wallowing in the doldrums.

The artificial intelligence (AI) chip giant isn't alone. Fellow tech and growth stocks have tumbled in recent weeks amid concern about President Trump's tariffs on imports. The idea is these taxes may increase costs for companies such as Nvidia that produce products abroad -- and a general increase in prices may hurt the overall economy.

All this has pressured tech companies, even pushing the Nasdaq Composite (NASDAQINDEX: ^IXIC) into a bear market earlier this month. Though Trump's exemption of electronics products from tariffs was a bit of bright news, the president also signaled this move may be temporary.

On top of this, Nvidia faces another headwind, and that's restrictions on chip exports to China. And just this week, this problem deepened. Can Nvidia chief Jensen Huang beat this latest challenge? Let's turn to history for an answer.

Image source: Getty Images.

Nvidia's AI empire

First, a quick bit of background on Nvidia. The company has built an artificial intelligence (AI) empire, offering a broad range of products and services to customers developing AI platforms. And the crown jewel of this is Nvidia's AI chips, known as graphics processing units (GPUs). They drive key AI tasks such as training and inferencing -- and importantly, they are the world's most powerful and sought-after accelerators.

All this has helped Nvidia generate double- and triple-digit revenue growth over the past couple of years, reaching record levels into the billions of dollars. And Nvidia focuses on innovation in order to keep this leadership and revenue growth going.

But in recent times, the picture has darkened. As mentioned, Nvidia, along with other tech players, faces uncertainty due to the developing tariff situation. Yes, an exemption is in place now, but the Trump administration indicated it may soon announce a new tariff level for electronics. Until we know the level of that potential tariff, risk remains.

In addition, a new challenge has emerged. Nvidia says the U.S. government informed the company that it must have a license to export its H20 chips to China. This is a new and unexpected development, and as a result, Nvidia announced a $5.5 billion charge related to H20 inventory and purchase commitments. This charge will be included in the fiscal first quarter, set to end on April 27.

Blocking exports to China

The government hasn't granted Nvidia or fellow chip designers a license, so for the moment, they can't export to China. And unless the government offers companies licenses, and quickly, it's likely this will impact earnings in coming quarters too. So, it's logical to expect lower revenue from Nvidia and its peers, at least in the near term.

Now, let's consider whether Nvidia's Huang can overcome this latest challenge. Here, we can look to his moves in the past when challenges have come up. For example, when the pandemic disrupted the global supply chain a few years ago, Huang paid more than $1 billion to secure its chip supply. Nvidia doesn't manufacture its chips, and instead relies on Taiwan Semiconductor Manufacturing.

Another example: When the Biden administration announced the initial chip restrictions to China, Huang set Nvidia to work designing a new chip to match export guidelines -- that became the H20.

These issues, spanning 2021 and 2022, supported earnings growth and eventually led to share price performance.

NVDA data by YCharts

And Huang hasn't been afraid of seizing opportunities too, for instance turning the GPU, which originally served the gaming market, into a key element for general-purpose computing. Nvidia launched parallel computing platform CUDA to make this happen back in 2006. This broadening of Nvidia's reach also led to a time of share price gains.

NVDA data by YCharts

So, history shows us Huang always has been proactive, which has resulted in positive outcomes for Nvidia.

Will Huang and Nvidia prevail?

Now, let's return to our question: Will Huang beat this latest challenge?

History shows us the Nvidia CEO has a strong track record of making the right decisions at the right times. That's positive. And right now, Huang is continuing this -- he arrived in Beijing this week to meet with the China Council for the Promotion of International Trade, according to Reuters.

Of course, no matter how active Huang is in this situation, the U.S. government ultimately is the decision maker. And if sales to China are completely eliminated, this will weigh on Nvidia's earnings -- sales to that country made up 14% of the company's data center revenue in the 2024 fiscal year.

Still, Nvidia has shown its resilience facing past challenges, and the company remains the leader in the high-growth AI market. So, even in the worst-case scenario, there's reason to believe the resourceful Huang will find a way to limit the impact -- and all this makes Nvidia a strong long-term buy for tech investors, even amid the current turmoil.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.