The AI Jackpot: How Nvidia and AMD Hit the Market’s Sweet Spot

Tech giants rally as trade tariffs ease and AI innovations push industry growth into overdrive.

Editorial Team (ET)May 8, 2025

The US stock market kicked off the week on a high note, with tech stocks leading a significant rally. Nvidia, AMD, and Meta saw notable gains as reports of a more targeted approach to trade tariffs and a major artificial intelligence breakthrough out of China fueled investor optimism.

Markets have been particularly sensitive to trade developments, and Sunday’s reports that the Trump administration plans to scale back reciprocal tariffs set to take effect on April 2 sparked a wave of buying across the tech sector. The proposed changes include easing tariffs on automobiles and semiconductors, two industries closely tied to the AI boom.

Meanwhile, the AI race continues to accelerate, with China’s Ant Group making headlines for successfully training AI models using a mix of domestically produced chips and AMD processors. This development signals a new level of competition in AI hardware, challenging the dominance of US-based chipmakers.

Nvidia, AMD, and Meta Drive Nasdaq’s Strength

Tech giants saw immediate gains as investors reacted to the news. Nvidia shares jumped 2.3%, with AMD surging over 5% in early trading. Meta also saw a strong push, climbing more than 3%. These movements helped lift the Nasdaq Composite by 1.5%, reinforcing the index’s reputation as the heartbeat of the AI-driven stock market.

For Nvidia, the rally comes on the heels of its GTC Conference, where CEO Jensen Huang emphasized the surging demand for AI computing power. He pointed to cheaper AI models, like China’s DeepSeek, as evidence that the industry is still in its early stages of expansion.

This perspective counters fears that lower-cost AI models could threaten Nvidia’s dominance. Instead, it suggests the need for even greater processing capabilities, which would play directly into Nvidia’s strengths. Earlier this year, the company’s stock took a hit after DeepSeek’s R1 model rivaled OpenAI’s expensive models, but the latest market response signals renewed investor confidence.

AI Race Reshaping Market Sentiment

Beyond the US, AI investments are becoming a defining theme for global tech markets. The recent revelation that a South Korean AI chip startup, FuriosaAI, turned down an $800 million acquisition offer from Meta underscores the confidence among smaller players in this space.

This move alleviates immediate concerns for Meta shareholders about regulatory scrutiny and costly integrations. At the same time, it signals that AI startups see significant potential in remaining independent rather than being absorbed by tech giants.

Nvidia’s role in this evolving landscape is critical. The company continues to push the boundaries of AI hardware, even as US regulations restrict exports to China. Despite these restrictions, competition from Chinese AI developers and alternative chip suppliers remains fierce, forcing Nvidia to innovate at an even faster pace.

Trade Policy Becomes the Market’s Key Catalyst

While AI advancements are driving long-term excitement, the immediate market narrative remains focused on trade policy. The Trump administration’s handling of tariffs is proving to be a major catalyst for stock movements, with investors reacting sharply to any hints of policy shifts.

Over the past few weeks, concerns over US economic health and corporate profits have dominated market sentiment. However, Monday’s rally highlights the market’s sensitivity to trade developments. As one analyst noted, “We are watching headline to headline,” emphasizing that investor confidence is increasingly tied to tariff decisions.

Conclusion

Nvidia, AMD, and Meta are at the center of this week’s market rally, fueled by a combination of tariff adjustments and fresh AI breakthroughs. The tech sector continues to prove its resilience, with AI developments reshaping the competitive landscape while trade policies set the pace for investor sentiment.

As markets digest these latest developments, the focus remains on whether AI leaders like Nvidia can maintain their dominance in an increasingly crowded and rapidly evolving space. One thing is certain—AI and trade policy will continue to shape the market’s trajectory in the coming months.

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