Nvidia and AMD's 15% Government Fee ‘Is a Small Price to Pay,' Says Ives

Business Insider

19 hours ago

Investment firm Wedbush believes that a new U.S. deal that allows chipmakers Nvidia (NVDA) and AMD (AMD) to sell their AI chips in China removes a major roadblock for growth in the AI sector. Interestingly, Nvidia will reportedly pay 15% of revenue from its H20 AI chips, and AMD will do the same with its MI308 chips. While the structure of the deal is highly unusual and likely to raise legal and policy questions, analysts, led by five-star-rated Daniel Ives, see it as a major growth driver not only for these two companies but for the U.S. tech industry as a whole.
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The analysts also noted that if President Donald Trump had continued the blockade on Nvidia's H20 chip, it could have handed Huawei a $15 billion per year opportunity, thereby giving China a competitive edge in AI while limiting U.S. tech firms. Instead, the current approach seeks to balance national security priorities with the need to support American innovation. Notably, Wedbush describes this moment as an 'AI Arms Race' between the U.S. and China, and credits the Trump administration for carefully handling the situation so that U.S. tech companies aren't held back in the global market.
In addition, Ives and his team argue that the U.S. is now ahead of China in advanced technology for the first time in 30 years, thanks to the AI revolution. However, China is quickly closing the gap, with firms like Huawei pushing forward aggressively. Still, the key difference is that Nvidia makes the core chip that is powering AI across the world. Therefore, as Ives puts it, paying 15% to the White House is a 'small price' to access China and other vital markets.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 35 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $189.23 per share implies 4.2% upside potential.