Nvidia Stock Drops After Big Tech Earnings Boom. What’s Pumping the Brakes.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy Argonne National Laboratory)

Nvidia stock dropped Friday on what seemed to be tariff worries. Amazon’s results weren’t helping either.

The chip maker’s shares were down 3.6% at $171.50. The stock fell 0.8% Thursday. Nvidia peers Advanced Micro Devices and Broadcom were down 4.7% and 2.8%, respectively.

Much of the tech sector was getting hit by President Donald Trump’s tariffs on many major U.S. trading partners. Investors decided to respond by retreating from highly valued companies.

Earlier this week, Nvidia touched record intraday highs after earnings from Alphabet , Microsoft, and Meta Platforms underlined heavy spending on AI infrastructure.

Amazon.com reinforced the theme after Thursday’s close with its earnings report. The e-commerce titan said its first-half capital expenditure came to $56 billion, and projected spending another $60 billion in the second half, ahead of analysts’ expectations. Much of that will go for data centers housing Nvidia hardware.

The four companies together have outlined capital expenditures of roughly $378 billion this year, up 65% from 2024, and more growth next year.

“With hyperscalers representing the tip of the spear for investments in the AI platform shift, the continued strong growth and upward revisions for investments are a broadly positive sign for most names under our coverage,” wrote William Blair analyst Sebastien Naji.

“Nvidia is a top beneficiary as the leading GPU provider to all four companies,” he said in a research note.

Still, Amazon’s robust spending plans aside, Amazon Web Services second-quarter results grew at just 17.5% versus the prior year—compared with 32% growth from Google Cloud and 39% growth from Microsoft Azure for the same period.

Investors almost certainly wanted better growth numbers from AWS, the market leader in cloud-computing services.

Nvidia stock has given back some of its gains, probably for two big reasons: profit-taking and China. The Cyberspace Administration of China wants Nvidia to explain the “backdoor security risks” associated with its H20 chips sold in China and submit relevant documents, according to the regulator on Thursday.

“Cybersecurity is critically important to us. NVIDIA does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them,” an company spokesperson told Barron’s.

Write to Adam Clark at adam.clark@barrons.com