NVDA Stock To $200?
Nvidia (NASDAQ:NVDA) has announced that it received confirmations from the Trump administration permitting it to resume sales of its H20 artificial-intelligence chip to China after encountering a ban around April. This development comes just days after Nvidia's CEO Jensen Huang met with President Donald Trump. This decision represents a significant victory for Nvidia, which had been affected by stringent U.S. export controls designed to limit China's access to advanced AI technology. The H20 chip, specifically created to adhere to U.S. regulations on chip exports, is less powerful than Nvidia's leading products but has continued to be in high demand among Chinese clients. Separately, could oil help foster peace? See Trump's Russia Math, Simplified.
Nvidia recorded a $4.5 billion write-off in its most recent quarter due to unsold H20 chips that it could not reallocate to other markets. If sales of these high-volume chips to China resume, reversing some of this write-off could enhance earnings. Nvidia stock has been a strong performer this year, climbing nearly 18% to approximately $170 per share. Now, could easing U.S.-China tech tensions propel the next phase of Nvidia's climb towards the $200 threshold? (related:What's Happening With XRP Price?)
Why China Is Important For Nvidia
China represents a vast and swiftly expanding AI market, hosting tech behemoths like Baidu and Alibaba, along with newcomers such as DeepSeek, that are increasingly competing with the U.S. in AI software development. Nevertheless, China still significantly lags in AI hardware, as domestic AI chips produced by companies like Huawei do not match the performance delivered by Nvidia's cutting-edge GPUs. This establishes a profound dependence on Nvidia's technology to fulfill China's AI aspirations.
Simultaneously, China is an essential market for Nvidia. The nation generated $17 billion in revenue for the company in the fiscal year concluding in January 2025, which is roughly 13% of Nvidia's total revenue. Moreover, this figure may not fully capture the breadth of the situation. Numerous Chinese tech firms have reportedly utilized gray market resellers and overseas intermediaries in nations like Singapore, Malaysia, Taiwan, and Vietnam to circumvent U.S. export restrictions and acquire Nvidia's top-tier chips. These activities have led to governments enhancing enforcement measures and instigating crackdowns. Should the technology trade conflict ease, the recommencement of direct sales could substitute some of this shadow demand, offering Nvidia a clearer and more scalable growth trajectory in China.
Nvidia is concentrating on balancing its response to this Chinese demand while adhering to U.S. regulations. The company additionally stated that it has created a new AI chip for China, aimed at applications in factory automation and logistics. This chip is based on Nvidia's most advanced Blackwell architecture but includes downgrades in certain features to address concerns raised by the U.S. government regarding the export of cutting-edge technology to China.
Can This Take Nvidia Stock To $200?
While Nvidia stock has momentum in its favor, we consider that the stock may already be somewhat overvalued. We value Nvidia stock at approximately $130 per share, around 20% below the current market price. Refer to our analysis of Nvidia valuation: Expensive or Cheap for more information. Certainly, Nvidia trades at about 40x forward earnings, which is justifiable considering that the company is set to increase revenues by 55% according to consensus estimates. However, there are some reasons to exercise caution. While Nvidia continues to be the benchmark for AI, the rally driven by "fear of missing out" that has propelled the stock over the past two years might start to lose momentum.
Over the last three years, major technology companies have invested heavily in training increasingly larger AI models, significantly elevating the demand for Nvidia's high-performance chips. Nonetheless, incremental performance improvements from larger AI models could begin to plateau, and the availability of high-quality training data may also present as a bottleneck. Additionally, the AI landscape may begin shifting from training to inference, where efficiency and cost become more significant than sheer power. In this transition, AMD's MI series and open-source models might become more competitive. AMD's ROCm software platform, although not as sophisticated as Nvidia's CUDA, is expected to be sufficient for many inference tasks. This potential transition in AI workloads, combined with the risks associated with growth normalization, could negatively impact the demand for Nvidia's most powerful and costly GPUs, potentially slowing the pace of its earnings growth in the future.
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