Chip makers are seeing a shift in their fortunes.
This year has been quite the rollercoaster for semiconductor companies. Nvidia had a triumphant start, reaching an all-time high before plunging 37% from that peak. After that, the stock managed to regain some ground and even climbed higher. Concerns over tariffs, inflation pressures, and unclear regulations surrounding chip sales to China added to the wild fluctuation in 2025.
Fortunately, it seems like those worries have taken a backseat for now. Nvidia’s stock closed just 4% shy of its latest record on Wednesday.
This week brought reports suggesting that, perhaps, Nvidia is on the verge of a breakthrough that investors have been anticipating.
Facing China’s Tough Questions
As noted, there’s been a lot of uncertainty about selling AI chips to Chinese clients. Earlier this year, the US government halted the sale of Nvidia’s H20 chips. These specialized GPUs had to navigate stringent export restrictions while also delivering robust performance for AI tasks. As a result of this moratorium, Nvidia incurred a hefty $4.5 billion charge in the first quarter related to those H20 chips.
Sales of these AI chips to China accounted for about $17 billion in fiscal year 2025, which is roughly 13% of Nvidia’s total sales. With Wall Street predicting total revenues of $200 billion this year, that represents a possible $26 billion revenue hit.
However, CEO Jensen Huang’s extensive lobbying seems to have paid off. Nvidia has struck a 15% revenue-sharing deal with the US government, allowing it to resume its H20 chip sales in China. This agreement might enhance Nvidia’s profit margins and potentially open new opportunities.
Introducing B30A
According to Reuters, there are reports that Nvidia is working on a new AI chip targeted at Chinese customers, reportedly called the B30A. It’s suggested that this chip will offer about half the computing capacity of Nvidia’s flagship Blackwell B300 processor.
This 50% figure is intriguing. Just last week, former President Trump mentioned he was open to a reduced-capacity Blackwell chip, saying, “I could make a deal,” indicating a reduction to “30% to 50% [of computing power].”
Nvidia is keeping details under wraps, stating, “We are evaluating various products for our roadmap to remain competitive as long as permitted by the government.” They assure that all offered products comply with regulations and are strictly for legitimate commercial purposes.
Yet, if Nvidia aligns with the Trump administration’s conditions, it seems that this could present significant opportunities for Chinese firms.
Effects on Nvidia Investors
In a May interview, Huang speculated that the AI chip market in China could balloon to $50 billion annually in coming years, hinting at substantial opportunities ahead for Nvidia.
Analysts on Wall Street are predicting Nvidia could generate $200 billion in revenue for fiscal 2026, with estimates of $257 billion in fiscal 2027 and $300 billion for fiscal 2028. However, many analysts might not have updated their projections to account for this optimistic revenue potential.
Additionally, given the advanced features of the Blackwell chip—even a toned-down version may secure premium prices from Chinese clients, creating further revenue possibilities.
Previously, investors were quick to exit following the perception that Nvidia was sidelined from China’s AI market. Now, with Huang unlocking that door, the company’s outlook appears much more promising. Plus, with a sales ratio of less than 30 times next year, Nvidia’s stock seems relatively attractively priced.
