Trump’s AI Action Plan Could Supercharge Nvidia

Trump’s AI Action Plan Could Supercharge Nvidia

• I’ve taken a sell-the-news position in Nvidia via an Aug. 15 $170 put for $6.35 debit.
• Trump’s AI Action Plan is expected to include executive orders on chip exports, infrastructure and AI model governance.
• The semiconductor sector has already rallied in anticipation, setting up potential for a letdown.
• This trade allows for controlled downside exposure if sentiment turns after the event.

President Donald Trump is expected to unveil a comprehensive AI Action Plan tomorrow that includes at least three executive orders. These are likely to focus on easing restrictions on exporting advanced chips to countries like China, fast-tracking permits for data centers and power infrastructure, and establishing oversight on “bias” in AI models developed in the US.

This plan has generated a wave of optimism in the AI and semiconductor business, with investors betting the new proposals will unlock even more capital investment and loosen regulatory barriers for companies like Nvidia (NVDA).

Nvidia has been one of the primary beneficiaries of this optimism. As the market leader in graphics processing units (GPUs) that power large language models and AI infrastructure, The company sits at the center of the AI boom. But when expectations are sky-high, even a bullish outcome can fall short.

Why I’m taking a sell-the-news approach

Markets are forward-looking. And based on the price action in AI-related stocks, it’s clear the market has already begun pricing in the best-case scenario. The question is what happens after the announcement?

That’s where things get interesting, according to analysts at Morningstar.

“We believe much of the upside from potential chip export policy changes is already reflected in current valuations,” an analyst there wrote, referencing Trump’s rumored easing of restrictions on chipmakers like Nvidia and Advanced Micro Devices (AMD).

Similarly, Barron’s magazine warned in a recent editorial that “economists warn of potential overvaluation in AI infrastructure names. Most criteria for a speculative bubble are being met.”

In other words, the risk here isn’t bad news — it’s good news that’s already fully baked into the price.

The trade: NVDA Aug. 15 $170 put for $6.35

I’m positioned for a potential pullback in Nvidia with a $170 strike put expiring Aug. 15, purchased for a $6.35 debit. This setup gives me a clean, defined-risk play into and through the news event.

Here’s why this trade makes sense to me:

• Timing Flexibility: The August expiration allows the news cycle to unfold and for markets to digest the details.
• Defined Risk: My maximum loss is the $6.35 premium per contract, no margin required.
• Narrative Exhaustion: The AI story is no longer new. Policy support needs to be surprising to move the needle.

This trade isn’t about being bearish on Nvidia long-term. It’s about recognizing the short-term expectations might outpace reality. And when that happens, price often catches down to the fundamentals.

What could go right — or wrong

To be clear, this is a tactical trade, not a macro call on AI or semiconductors. There are very real upside risks.

If I’m wrong, here’s likely why:

• Trump actually over-delivers with real funding, timelines and fast-track approvals.
• China tensions ease, boosting chip exports and semis across the board.
• Tech rallies hard on dovish Fed vibes — Nvidia rides the wave regardless of news details.
• Or, hey, maybe Jensen Huang unveils a gold-plated GPU and says ChatGPT-5 runs exclusively on Nvidia — because why not?

But if I’m right ... the stock could see a sharp fade from resistance, with implied volatility contracting post-event. If Nvidia trades back to $160–$162 over the next few weeks, the $170 put could double in value — or more.

Historical context: The hype hangover Is real

We’ve seen similar setups before.

In 2021, President Joe Biden’s infrastructure stimulus headlines caused clean energy stocks to spike — only to fall sharply as delays and Congressional gridlock set

in. In 2023, AI software names like C3.ai (AI) and Palantir (PLTR) rallied hard into earnings, only to drop on guidance that didn’t match the hype.

Markets often overreact to the idea of change, only to retrace once the details are revealed. That’s the window I’m trading.

Final thoughts

While long-term fundamentals in AI are strong, trades are made on expectations vs. reality.

Trump’s AI Action Plan is generating significant buzz, but it’s also setting a high bar. I believe that bar may be too high for Nvidia to clear tomorrow, which is why I’m taking the other side of the trade with a short-dated put option.

It’s a risk-defined way to play potential disappointment in the news cycle.

Errol Coleman appears on the tastylive network shows Today’s Assignment and Trades on the Go.

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