Why Nvidia Stock Jumped Today

Despite initially opening the day's trading in the red, Nvidia (NASDAQ: NVDA) stock wound up posting gains in Tuesday's trading. The artificial intelligence (AI) hardware leader's share price ended the session up 1.7% and had been up as much as 4.6% earlier in the session.

Nvidia stock saw a modest recovery today as investors digested the effects of tariffs and other macroeconomic pressures and geopolitical dynamics that involve the company's chips. The AI leader's share price also got a boost from Taiwan Semiconductor Manufacturing's recent announcement that it will invest $100 billion to expand its U.S. chip-fabrication operations.

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Investors bought back into Nvidia stock after yesterday's rout

Nvidia stock fell 8.7% in yesterday's trading as investors reacted to the impending implementation of new tariffs on Canada and Mexico. Expectations that export restrictions and enforcement initiatives could intensify following new reports that China is gaining access to prohibited Nvidia chips through third-party sellers also added to sell-offs.

While these risk factors remain, investors bought back into stocks as the day progressed and helped drive a moderate shift in bullish sentiment for the day. Despite today's gain, Nvidia stock is still down 13.8% across 2025's trading.

TSMC's $100 billion U.S. investment could be good for Nvidia

TSMC plans to spend $100 billion to build new chip foundries in Arizona. The Taiwan-based chip fabrication leader manufactures Nvidia's semiconductor designs and is the world's largest and best-performing contract foundry.

Rising tensions between the U.S. and China and concerns that the latter country could move to invade or exert greater control over Taiwan have been a source of valuation volatility for the tech sector. TSMC has enormous importance in global supply chains and AI technologies in particular, and disruption of its operations would have huge adverse effects. With the fabrication giant expanding its operational footprint in the U.S., a major geopolitical risk factor could be mitigated -- but hitting its new expansion target in the country will take a long time.

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Keith Noonan 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.