This Artificial Intelligence (AI) Stock Could Thrive Despite U.S.-China Trade Pressures
The U.S. and China are at odds over a range of issues, including trade imbalances and AI competition.
The Trump administration tightened AI regulations related to China this year, and that's affected many companies.
Nvidia is among the businesses impacted by AI sales restrictions to China, but it looks positioned to continue its success despite the challenges.
10 stocks we like better than Nvidia ›
The U.S. government's current trade tensions with China stretch back to President Donald Trump's first term. But the situation isn't about tariffs alone. The U.S. is competing with its trading partner for supremacy in artificial intelligence. This led to new export restrictions on the sale of AI chips to China on April 9.
The updated regulations affect many tech businesses, including AI leader Nvidia (NASDAQ: NVDA). The company's sales of its popular graphics processing units (GPUs), powerful computer processors that have brought Nvidia success in the AI era, have been hurt by the federal government's export policies around such tech.
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Even so, several signs suggest Nvidia can continue to thrive despite the trade conflicts between the U.S. and China. Here is a look into Nvidia's potential for ongoing success despite the hurdles.
The impact of China restrictions on Nvidia
The frosty relations between the U.S. and China adversely affected Nvidia. The new export restrictions meant the company couldn't sell its AI chips earmarked for China, resulting in a $4.5 billion write-off for this unsold inventory in its fiscal first quarter, which ended April 27.
China was responsible for $5.5 billion of Nvidia's $44.1 billion in Q1 revenue. This figure could have been higher, since the company was barred from shipping an additional $2.5 billion in AI products in Q1.
Lost revenue isn't the only consequence. Nvidia CEO Jensen Huang declared, "The AI race is not just about chips. It's about which stack the world runs on. As that stack grows to include 6G and quantum, U.S. global infrastructure leadership is at stake."
In other words, strengthening American leadership in AI depends on organizations around the world building AI infrastructure with U.S. technology platforms, such as Nvidia's proprietary compute unified device architecture (CUDA) software for customizing GPUs. The current trade restrictions limit this from happening, according to Huang.
Nvidia's resilient business
These hurdles are significant, yet Nvidia demonstrated that its business remains strong in the face of such challenges. For instance, despite the loss of sales in China, its $44.1 billion in Q1 revenue represented impressive 69% year-over-year growth.
Its perseverance amid China sales setbacks is mirrored in Nvidia stock, which is up nearly 30% in 2025 through July 15, as shares hit a 52-week high of $172.40 on that date. Its soaring shares helped the company become the first to achieve a $4 trillion market cap.
Trump congratulated Nvidia on its stock's performance. Huang has visited the White House several times, and the positive relationship he has cultivated with Trump gives Nvidia an edge amid trade pressures.
In fact, the company recently announced plans to resume selling its AI chips to China, stating, "The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon."
Factors in Nvidia's favor
Huang noted Nvidia's tenacity amid trade tensions, asserting, "Every single year there were rules and taxes and tariffs and policies and regulations, and we survived... and whatever it turns out to be, we'll make the best of it."
The company's confidence in its future is illustrated in its fiscal Q2 outlook, which estimates $45 billion in revenue. This is a strong increase from the $30 billion made in the previous year.
Nvidia's success to date is poised to continue even if its sales to China remain tepid. The U.S. is its largest source of revenue, contributing $20.7 billion of Q1's $44.1 billion.
Moreover, the company's current AI platform, Blackwell, will soon make way for next-generation technology, Vera Rubin, due out in 2026. Vera Rubin is a superchip designed to transform how AI is integrated into supercomputers.
Many organizations are rushing to build data centers for their AI systems with Nvidia's products. For example, European manufacturers are building an AI facility focused on boosting industrial manufacturing. This installation will require 10,000 Nvidia GPUs. And Facebook parent Meta Platforms is constructing several data centers reportedly using over 1 million Nvidia GPUs.
This kind of hunger for Nvidia's AI products will continue to fuel the company's success for years to come. After all, industry forecasts estimate the AI market will expand from $244 billion in 2025 to $1 trillion by 2031.
Although the extent to which its China business eventually recovers is uncertain, Nvidia is poised to remain a key AI player on the global stage, thanks to innovations such as CUDA and Vera Rubin.
Its stock's price-to-earnings (P/E) ratio of 55 is getting up there but is still significantly lower than major rival Advanced Micro Devices 's 114. With many factors propelling Nvidia's business growth, its stock looks like a great long-term investment.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!*
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*Stock Advisor returns as of July 15, 2025
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