Nvidia gets the OK from Trump to sell chips to China. Is it a reason to buy the stock?
President Donald Trump’s green light for Nvidia to sell certain chips in China still has many details to be worked out — including whether China itself will allow it — and that’s why the stock’s reaction to the long-sought-after blessing was muted on Tuesday. But Wall Street analysts mostly believed this was time to buy because of the tremendous revenue opportunity that comes with exposure to this crucial datacenter market. Nvidia got the okay from Trump in a Truth Social post on Monday that said the chipmaker can ship its H200 artificial intelligence chips to “approved customers” in China, with the caveat that the U.S. get a 25% cut. NVDA 1D mountain Nvidia, 1-day performance Along with China approval, other obstacles still remain, including a chance Congress steps in to block the decision for national security reasons. Bernstein senior analyst Stacy Rasgon on Tuesday pointed out that a bipartisan Senate bill was introduced just last week to deny export licenses for the H200 and Blackwell chips for the next 30 months. But Rasgon ultimately believes Congress will yield to Trump. China may also refuse to buy the H200 chips as it had the lower quality H20 chips, though analysts expect that hardline stance was in part a bartering chip by Beijing for the better H200 chips. Wall Street expects that China will continue to focus on building out their own domestic capabilities to wean off its dependency on U.S. chipmakers, citing security concerns. But, analysts expects that Nvidia and other chipmakers will continue to benefit over the near term, given their superiority over any local chips. “AI datacenter buildout activity in China has been taking a slower pace ever since the H20 Chip restrictions in April. If H200 is allowed to be shipped into China in larger volumes, we believe that this could restart the buildout of AI datacenters,” JPMorgan’s Gokul Hariharan wrote on Tuesday. “We expect the localization trend is unlikely to slow down despite the availability of NVDA H200, but given the high demand for AI compute, we believe that both solutions are likely to co-exist for some period of time,” Hariharan added. Where is the stock headed? Indeed, the revenue potential is extraordinary. Wolfe Research’s Chris Caso said a “reasonable assumption” is that Nvidia can generate roughly $3.5 billion in quarterly revenue returns from China datacenters now that they’ve re-entered the market. Deutsche Bank Research’s Ross Seymore pointed out that the CEO Jensen Huang has highlighted a roughly $50 billion in potential annual revenue contribution from China AI demand as a whole. Most analysts were hesitant to ratchet up their price targets on the stock until there was more clarity. Some of those targets are also already assuming some China revenue restarts soon. Following the Trump decision, Wells Fargo reiterated its view that calls for 40% upside for Nvidia over the next 12 months. Bernstein’s Rasgon also sees gains of that magnitude or more.
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