TLDRs;
- Nasdaq fell 3.6%, its worst drop since April, as Trump renewed tariff threats against China.
- Tech giants lost $770 billion in market value, led by Nvidia, Amazon, and Tesla.
- Trump announced a 100% tariff on Chinese goods and export controls effective November 1.
- Analysts warn that escalating trade tensions could derail the 2025 AI stock rally.
The Nasdaq Composite (^IXIC) plunged 3.6% on Friday, marking its steepest one-day drop since April, as President Donald Trump reignited trade tensions with China.
The sell-off wiped a staggering $770 billion off the market value of major technology companies, signaling investor unease about the potential fallout of renewed tariffs and export restrictions.
Trump announced that his administration plans to impose a 100% tariff on Chinese imports and introduce export controls on critical software starting November 1. The announcement sent shockwaves through Wall Street, reversing months of strong gains fueled by optimism in artificial intelligence (AI) spending.
The S&P 500 also tumbled 2.7%, with tech-heavy sectors taking the brunt of the losses.
Nvidia, Amazon, and Tesla Lead Declines
Among the hardest-hit companies were Nvidia (NVDA), Amazon (AMZN), and Tesla (TSLA), each falling around 5% during the trading session. Nvidia alone saw its market capitalization drop by $229 billion, while Amazon lost $121 billion, and Tesla shed $71 billion.
After-hours trading only worsened the pain, with all three stocks slipping an additional 2% following Trump’s confirmation of the tariff plan.
Nvidia, which had become the world’s first $4.5 trillion company in September thanks to soaring demand for AI chips, saw its gains evaporate as investors reassessed how export controls could affect its global business. The company’s GPUs power much of the AI infrastructure for firms like Microsoft (MSFT) and OpenAI, both of which have been expanding aggressively in the AI space.
AI Boom Faces First Real Shock
The latest sell-off marks the first significant disruption to the AI-driven rally that dominated markets for most of 2025. Nvidia and Microsoft had benefited from a wave of corporate investments into cloud computing and machine learning infrastructure.
OpenAI’s recent rollout of the Sora 2 video generation model and a major update to ChatGPT, which now counts over 800 million weekly users, had only added to the AI frenzy. Yet, the looming restrictions on “critical software exports” threaten to choke the flow of innovation between U.S. tech companies and global partners, particularly in Asia.
Microsoft, which provides GPUs through its Azure cloud, saw its valuation shrink by $85 billion. Alphabet (GOOGL) fell 2%, and Meta Platforms (META) slumped nearly 4%, contributing to the market-wide downturn.
Analysts Warn of Extended Volatility
Analysts say the shock could trigger weeks of volatility as investors digest the implications of Trump’s aggressive trade stance.
“We’re seeing a classic flight from risk,” said one market strategist. “The AI rally was built on optimism and capital expenditure, tariffs threaten both.”
For Amazon, the impact could be particularly acute. The company relies heavily on imports and operates one of the world’s largest cloud businesses. CEO Andy Jassy had previously dismissed concerns about tariffs, calling speculation around their economic effects “misreported.” However, Friday’s market reaction suggests investors are no longer so confident.
Tesla also faced pressure despite unveiling new lower-priced models earlier in the week. The automaker, which reports Q3 earnings on October 22, saw its valuation drop by $71 billion amid concerns over rising component costs and reduced global demand.
As the U.S.-China trade war narrative resurfaces, investors are left questioning whether the AI-fueled stock boom that defined 2025 can withstand political shocks of this scale.
