Nvidia Remains A Top Pick Despite Tariff Headwinds, Says Analyst: '...Important Data Center Modernization…Among the Last Areas to Be Cut'

In the face of a potential semiconductor industry slowdown due to tariff uncertainties, Nvidia Corporation NVDA is expected to hold its ground, according to a recent analysis by Redburn Atlantic.

What Happened: Redburn Atlantic on Tuesday, highlighted Nvidia’s potential to endure the industry’s turbulence. The firm maintains a buy rating on Nvidia and has named it a ‘top pick’ for investors once the sector’s turbulence subsides. The price target for Nvidia stands at $178, indicating a substantial 61% upside from Monday’s closing price, reported CNBC.

According to analyst Timm Schulze-Melander, despite macro uncertainties and potential demand softening, investments in leading-edge AI and chipmaking are expected to show resilience. Schulze-Melander further stated that a slowdown in AI innovation would pose a greater threat to Nvidia’s positive outlook than a U.S. economic decline.

"We assess that leading-edge AI and chipmaking investment will prove to be more resilient,” stated Schulze-Melander.

SEE ALSO: Ironically, Because Of All The New Tariffs, It’s Now Way Cheaper To Make Our Chocolate Bars Outside The US,’ Says MrBeast

Why It Matters: Nvidia’s resilience can be attributed to its strategic focus on AI infrastructure. On Monday, Nvidia announced plans to develop $500 billion in AI-related infrastructure across the United States over the next four years. This move signals a significant shift in the company’s global supply strategy.

President Donald Trump praised CEO Jensen Huang and credited the tariff policies for driving Nvidia’s massive commitment to build AI infrastructure in the United States. Trump’s upcoming tariff plan on imported semiconductors emphasizes the desire to manufacture semiconductors domestically, which aligns with Nvidia’s recent commitment.

That being said, the current macroeconomic environment against the backdrop of tariffs is full of uncertainty and Redburn Atlantic acknowledges that. Schulze-Melander stated that a slowdown in AI innovation poses a greater risk to Nvidia's positive outlook than a U.S. economic downturn, as it would impact the recovery of global PC and handset sales.

However, the analyst expects the phenomenon to impact the entire semiconductor supply chain, not just Nvidia. “We expect strategically important data center modernization to be among the last areas to be cut – providing resilience compared with the broader cycle," stated the analyst.

Benzinga’s Edge Rankings highlight strong momentum and growth rankings for Nvidia in the 77th and 95th percentiles, respectively. Curious how other stocks stack up? Click here to uncover growth and momentum scores for top stocks.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.