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Yahoo
an hour ago
- Yahoo
Trump gave China the AI chips it wanted. Beijing isn't saying thank you
In a surprising reversal of the United States' years-long technology restrictions on China, President Donald Trump last month allowed Nvidia to resume sales of a key AI chip designed specifically for the Chinese market. Yet rather than celebrating, Beijing's response has been noticeably lukewarm, despite having long urged Washington to ease the stringent export controls. In the weeks since the policy U-turn, Beijing has called the chip a security risk, summoned Nvidia for explanations and discouraged its companies from using it. The less-than-welcoming sentiment reflects Beijing's drive to build a self-sufficient semiconductor supply chain – and its confidence in the progress its rapidly advancing chip industry has made. But the cold shoulder may also represent some political posturing. Despite significant advances in its semiconductor sector, China still needs America's chips and technology. Experts said China's national champion Huawei has developed chips with performance comparable to — and in some cases surpassing — the newly approved Nvidia chip. However, China still wants the more advanced AI processors that remain blocked under US export controls. In the years since Trump first imposed tech restrictions on Huawei during his first term, China's chip technology has made significant strides, spurred by the frustration that mounted as Washington piled on export controls, said Xiang Ligang, director-general of a Beijing-based technology industry group and an advisor to the Ministry of Industry and Information Technology. 'We have this capability, it's not as they imagine – that if China is blocked, China won't be able to function, or that China will be finished,' he said. To him, the policy about-face only reflects the importance of having a wholly homegrown chip supply chain. 'For Chinese companies, we may only have one choice if we wish to ensure a relatively secure supply of chips – that means relying on our own domestically produced chips,' Xiang said. That may be China's goal, but in the high-stakes AI race, with all its national security implications, the US remains the leader, at least for now. China is not 'naive' The chip in focus is Nvidia's H20, which was released by the AI chip leader last year to maintain access to the Chinese market following strict export controls put in place under the Biden administration that stopped the export of chips with high processing power. Last month, Trump greenlit the sales of the chip to China after banning it in April as the US trade frictions with China deepened. Trump has justified his decision by calling the chip 'obsolete,' as it lags behind the company's cutting-edge AI processors like Blackwell or H100, from which H20 is derived. He and his officials appeared to have embraced a view long promoted by Nvidia's CEO Jensen Huang – that US can maintain its tech leadership only through ensuring its chips remain the global standard. 'You want to sell the Chinese enough that their developers get addicted to the American technology stack,' Commerce Secretary Howard Lutnick said last month. But the dramatic reversal has fueled questions about Trump's transactional approach to national security – once considered off-limits to bargaining. China, on the other hand, is alarmed by the alleged security risks of Nvidia's H20s like 'tracking and positioning' and 'remote shutdown' features, capabilities that some US lawmakers have called for but Nvidia denies it has placed in its chips. China's cyberspace watchdog and industry ministry have since summoned the American chip giant over the security concerns and urged firms to avoid H20 chips, a development which was previously reported by Bloomberg. One major Chinese tech company which has developed its AI models has received notice from the authorities urging it to exercise caution in the use of H20s, and advising it not to purchase them, a company insider said on the condition of anonymity. CNN has reached out to the ministry and the cyberspace authorities for comment. An Nvidia spokesperson told CNN that NVIDIA 'does not have 'backdoors' in our chips that would give anyone a remote way to access or control them.' 'Banning the sale of H20 in China would only harm US economic and technology leadership with zero national security benefit,' the spokesperson added. But China believes the US isn't playing fairly, Xiang said. 'What we actually want, you refuse to sell us. For the things you already consider obsolete, you still want to dump them into our market and occupy our market. Do you really think we're that naive?' he said. Still coveted Despite Beijing's concerns and the H20's reduced performance, the chips remain highly sought after by Chinese companies. Equity research firm Bernstein estimated that shipment of the chips to China this year would have reached 1.5 million units, or about 23 billion in revenue, without Trump's export restrictions. Major buyers include Chinese tech giants such as TikTok owner ByteDance, Alibaba and Tencent. While Huawei's top AI chips excel in computing power – one of the key measures in evaluating processors' performance – in comparison with H20, they fall short in terms of memory bandwidth, which determines how much data can move between a chip's memory and computing unit. That bandwidth depends on a technology known as High Bandwidth Memory (HBM) used in AI chips to ensure efficient data transmission in AI model training. China's top HBM maker CXMT, or ChangXin Memory Technologies, is still about three to four years behind industry leaders like South Korea's SK Hynix and Samsung, and American Micron, according to MS Hwang, research director at Counterpoint Research, a research firm. Last year, the Biden administration further tightened export controls on China, including restrictions on HBM sales, forcing Chinese companies to rely on existing stockpiles. Beijing has requested Washington to lift restrictions on HBM as part of the trade deal negotiations, Financial Times reported this week. Key appeal of H20 for Chinese companies also lies in Huawei's limited production capacity and Nvidia's well-established ecosystem, said Qingyuan Lin, senior analyst at Bernstein focusing China's semiconductor industry. 'Even when you want to completely replace the H20 demand with the local guys, they're not able to deliver the amount of chips that's needed,' he said. The supply bottlenecks stem from constraints in scaling up production of both the manufacturing of computing units of the AI chips and the integration of various components in them, a technology known as advanced packaging in the industry, Lin said. Bernstein estimated that Huawei's shipments of its advanced AI chips in 2025 would amount to around 700,000 units, still far short of the demand in the country. CNN has reached out to Huawei for comment. Meanwhile, Nvidia's powerful ecosystem, which integrates its chips with its software platform, has created what experts call a 'moat,' making it difficult and costly for AI developers who train models on its software to switch to alternatives. 'The H20 comes with a complete ecosystem covering both hardware and software support, ensuring better compatibility and ease of integration,' said Brady Wang, associate director at Counterpoint. 'This ecosystem maturity is still a challenge for many Chinese-developed chips, making the H20 more attractive despite its cost disadvantage.' 'Very close' Still, experts said China's rapid progress in semiconductor technology should not be underestimated. Years of tightening export controls have injected both urgency and opportunity into Beijing's push for self-sufficiency, Lin said. While chipmaking technology appeared to stall after Huawei's 2023 flagship smartphone showcased advanced chips that American officials had deemed extremely difficult to produce, domestic chipmaking equipment companies have been steadily gaining ground, he said. 'The local guys actually had very little chance to gain share from the global players because of the technology gap, but export controls created a market that didn't exist before and accelerated the domestic substitution,' he said. Bernstein projects that the percentage of homemade AI chips in China will surge from 17% in 2023 to 55% by 2027, while American suppliers like Nvidia and AMD will shrink to 45% from 83%. In April, Huang of Nvidia met with Trump in Washington, urging the administration to loosen export controls on chips and saying that the diffusion of American AI technology around the world needs to be accelerated. 'There's no question that Huawei is one of the most formidable technology companies in the world…they made enormous progress in the last several years,' he said. 'China is right behind us. We're very, very close.' CNN's Hassan Tayir and Fred He contributed reporting. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
1 Brilliant Artificial Intelligence (AI) Stock That Will Be Worth More Than Apple by 2030
Key Points AWS and advertising drive Amazon's growth. Apple hasn't released an innovative product or feature in some time. 10 stocks we like better than Amazon › Apple is the world's third-largest company by a wide margin, with a $1 trillion gap between it and fourth-place Alphabet . However, I think several companies are slated to pass Apple in market share over the next five years, including fifth-place Amazon (NASDAQ: AMZN), which is valued at around $2.4 trillion compared to Apple's $3.5 trillion. That's a wide gap to make up in five years, but looking at Amazon's growth tailwinds versus Apple's makes it fairly clear that Amazon is the much better stock pick. Amazon has two business units driving profit growth Apple's business is fairly straightforward; it's the leading consumer tech brand and generates significant revenue selling iPhones and other products in the Apple ecosystem. Amazon is a bit more complex, as it has the online store that most investors are familiar with, but that's not the best reason to invest in it. Although its online stores division posted the best quarter in a long time (revenue rose 11% year over year), the real stars of the show are Amazon Web Services (AWS) and its advertising services division. AWS is Amazon's cloud computing platform, and it is seeing strong demand fueled by the migration of traditional workloads to the cloud, as well as by new artificial intelligence (AI) workloads. AWS grew revenue by 17% year over year in Q2, which is strong growth considering it generated nearly $31 billion in revenue during the quarter. However, AWS's primary competitors (Microsoft's Azure and Google Cloud) posted stronger growth rates in their corresponding quarters, so investors are worried about AWS's long-term ability to perform in this sector despite its being the market-share leader. AWS will likely continue to underperform its peers due to its size, but 17% growth is nothing to sneer at. AWS is also a large part of Amazon's profit picture. In Q2, it accounted for 53% of Amazon's operating profits despite accounting for only 18% of revenue. Analysts still expect cloud computing to grow rapidly over the next few years, and if Amazon surpasses Apple in market cap, this will be a primary reason why. Advertising services is Amazon's fastest-growing segment, with revenue rising 23% year over year, an acceleration over previous quarters' growth rate. Amazon has one of the most lucrative places to advertise on the internet, as consumers are already coming to their platform to make purchases. Paying to place a product at the top of an Amazon search almost guarantees increased sales. This is worth a lot to its advertising clients and will be a key part of Amazon's investment thesis over the next few years. Amazon's margins are rising Amazon isn't a revenue growth story; it's a profit growth story. The rise of high-margin businesses like AWS and advertising services has helped Amazon boost its profit margins over the past few years. AMZN Profit Margin data by YCharts With its two high-margin business segments growing faster than other parts of its business, Amazon will naturally have elevated profit growth rates. In Q2, Amazon's operating income rose 31% year over year. Contrast that with Apple, whose Q3 FY 2025 (ending June 28) operating income increased by 11%. Amazon's profit growth rate is much faster. Over five years, a 30% growth rate will increase its operating income by 271% while an 11% growth rate increases operating income by only 69%. That would be enough to drive Amazon's profits higher than Apple's, propelling it to surpass it in size along the way. Amazon is an excellent stock pick for the next five years and a no-brainer buy at today's prices. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!* Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Keithen Drury has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 1 Brilliant Artificial Intelligence (AI) Stock That Will Be Worth More Than Apple by 2030 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
an hour ago
- Business Insider
APP vs. ACHR vs. RGTI: Which ‘Strong Buy' Growth Stock Has the Highest Upside Potential, According to Wall Street?
The optimism around artificial intelligence and many breakthrough technologies, including air taxis and quantum computing, is driving several growth stocks higher. Using TipRanks' Stock Comparison Tool, we placed AppLovin (APP), Archer Aviation (ACHR), and Rigetti Computing (RGTI) against each other to find the growth stock with the highest upside potential, according to analysts. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. AppLovin Corporation (NASDAQ:APP) Stock Ad tech company AppLovin provides AI-enhanced solutions that enable businesses to reach, monetize, and grow their audiences. The company recently reported market-beating second-quarter results, defying certain allegations made by three short sellers – Fuzzy Panda Research, Muddy Waters, and Culper Research. AppLovin is witnessing strong demand for its artificial intelligence (AI)-powered technology that enables advertisers to target mobile game users more effectively. The company impressed investors with a 77% year-over-year growth in its Q2 revenue to $1.26 billion and a 168.5% jump in adjusted earnings per share (EPS) to $2.39. Looking ahead, AppLovin stands to gain from the legal battle between Apple (AAPL) and Epic Games, as changes to the iPhone maker's App Store monetization policies are expected to benefit mobile advertisers and app developers. What Is the Target Price for AppLovin Stock? Following the Q2 print, Loop Capital analyst Rob Sanderson reiterated a Buy rating on AppLovin stock with a price target of $650. The 5-star analyst highlighted that the company reported another beat-and-raise quarter, though somewhat more muted in terms of the magnitude of upside seen in recent quarters. Sanderson noted that the majority of the 9% sequential growth in Q2 revenue was driven yet again by gaming customers, as the company 'methodically refines its offering for web-based (e-commerce) advertisers.' He views the Q3 revenue guidance as conservative. Overall, AppLovin stock scores a Strong Buy consensus rating based on 17 Buys and three Hold recommendations. The average APP stock price target of $524.78 indicates about 20% upside potential from current levels. AppLovin stock has risen more than 35% year-to-date. Archer Aviation (NYSE:ACHR) Stock Archer Aviation is a maker of electric vertical takeoff and landing (eVTOL) aircraft. ACHR stock is flat on a year-to-date basis, but has rallied more than 163% over the past year due to the optimism around eVTOL technology. The Trump administration's executive order to accelerate VTOL development and commercialization, the announcement of multiple partnerships with major companies like United Airlines (UAL), and selection as the official air taxi service for the 2028 Los Angeles Olympics have bolstered Wall Street's optimism about ACHR's growth potential. Archer Aviation is a pre-revenue company. It recently reported a larger-than-anticipated loss for Q2 2025 due to higher spending to support its growth. Nonetheless, Wall Street is optimistic about ACHR due to solid progress on key deals, including the UAE program, and its robust cash position of $1.7 billion that will enable growth investments. Is ACHR a Good Stock to Buy? In reaction to the Q2 results, Cantor Fitzgerald analyst Andres Sheppard reiterated a Buy rating on Archer Aviation stock with a price target of $13. The 4-star analyst is encouraged by ACHR's plans to boost manufacturing and the production of the six additional aircraft (three of which are in final assembly), which management stated will 'either be used for FAA Certification or initial commercialization deployment.' Sheppard continues to expect the UAE to be the initial market for ACHR's eVTOL commercialization, with the company reaffirming its timeline to commercialize in the fourth quarter of 2025. The analyst also cheered Archer Aviation's expansion into hybrid VTOLs, which he believes will de-risk its business. Additionally, he continues to view the partnerships with the Department of Defense (DoD), United Airlines, and Stellantis (STLA) as important differentiators. He noted that ACHR now has the highest liquidity in the industry and has been gaining momentum by expanding its order book via its launch edition program, which aims to commercialize in select markets prior to FAA Certification. Sheppard is also optimistic about ACHR's air taxi service deal for the LA 2028 Olympics. With six Buys and two Holds, Wall Street has a Strong Buy consensus rating on TipRanks. The average ACHR stock price target of $12.06 indicates about 23% upside potential from current levels. Rigetti Computing (NASDAQ:RGTI) Stock Rigetti Computing, which boasts of being a pioneer in full-stack quantum-classical computing, recently reported underwhelming results for the second quarter of 2025. RGTI's Q2 revenue declined by about 42% year-over-year to $1.8 million, while net loss per share increased to $0.13 from $0.07 in the prior-year quarter. Despite the dismal results, RGTI remains upbeat about its growth opportunities in the lucrative quantum computing space. The company ended the second quarter with $571.6 million in cash, cash equivalents, and available-for-sale investments (with no debt), thanks to gross proceeds of $350 million from an equity offering completed in June. Rigetti is confident about the scheduled release of its 100+ qubit chiplet-based system at 99.5% median two-qubit gate fidelity before the end of this year. Is RGTI Stock a Buy, Sell, or Hold? Following the Q2 results, Benchmark analyst David Williams increased the price target for Rigetti Computing stock to $20 from $14 and reaffirmed a Buy rating, noting continued progress on the company's chiplet-based scaling strategy. The 5-star analyst highlighted that the company remains on schedule to deliver its 100-qubit multi-chiplet QPU, an important milestone on the path to quantum advantage. He added that the recent release of the Cepheus-1 system successfully met the fidelity target while significantly reducing error rates. It marked the launch of the industry's largest multi-chip quantum processor, establishing the scalability of Rigetti's architecture. Overall, Williams believes that these advancements strengthen Rigetti's roadmap toward a 1,000+ qubit system. Although management continues to see a 3 to 4-year timeline to reach the quantum advantage threshold, Williams thinks that there are meaningful opportunities to generate revenue well ahead of these targets. Rigetti Computing earns Wall Street's Strong Buy consensus rating based on seven Buys and one Hold recommendation. The average RGTI stock price target of $18.71 implies 12.4% upside potential. RGTI stock has risen 9.1% year-to-date. Conclusion Wall Street is bullish about the growth prospects of AppLovin, Archer Aviation, and Rigetti Computing. Currently, analysts see higher upside potential in Archer Aviation stock than in the other two growth stocks. Investors need to bear in mind that Archer Aviation is a high-risk, high-reward investment, with strong prospects in the eVTOL aircraft space.
