Nvidia (NVDA) shares edged lower this week after reports that Chinese regulators ordered major tech companies to stop buying its AI chips.
While the move underscores rising geopolitical risks, investors remain focused on the company’s dominant role in powering the global artificial intelligence boom.
Key Points
China Escalates Pressure on Nvidia
Nvidia faces fresh challenges in China after the Cyberspace Administration ordered leading firms such as Alibaba and ByteDance to stop testing and buying its RTX Pro 6000D AI chip. The product, introduced just months ago and tailored to comply with U.S. export restrictions, is now caught in Beijing’s broader effort to reduce reliance on U.S. technology.
Adding to the strain, Chinese regulators accused Nvidia of antitrust violations tied to a past acquisition, further clouding the company’s ability to expand in the world’s second-largest economy. While China once represented more than 13% of Nvidia’s revenue, its share has already slipped to single digits as restrictions take hold.
- China’s internet watchdog ordered companies like ByteDance and Alibaba (BABA) to halt purchases of Nvidia’s RTX Pro 6000D chip.
- Nvidia CEO Jensen Huang expressed disappointment but noted the company had already removed China sales from forecasts.
- Despite China headwinds, Nvidia’s global AI demand remains robust, led by its Blackwell platform and data center growth.
Nvidia faces fresh challenges in China after the Cyberspace Administration ordered leading firms such as Alibaba and ByteDance to stop testing and buying its RTX Pro 6000D AI chip. The product, introduced just months ago and tailored to comply with U.S. export restrictions, is now caught in Beijing’s broader effort to reduce reliance on U.S. technology.
Adding to the strain, Chinese regulators accused Nvidia of antitrust violations tied to a past acquisition, further clouding the company’s ability to expand in the world’s second-largest economy. While China once represented more than 13% of Nvidia’s revenue, its share has already slipped to single digits as restrictions take hold.
Investor Jitters Amid Data Center Miss
The timing of the news adds pressure for investors already weighing Nvidia’s latest earnings. The company recently reported slower-than-expected growth in its data center business—its largest revenue driver. While sales still jumped 56% year-over-year, that marked a cooldown from nearly 100% growth in earlier quarters.
Some analysts, including veteran investor Dan Niles, warn that demand expectations for AI infrastructure may be running ahead of fundamentals. Rising competition from Broadcom (AVGO) and Advanced Micro Devices (AMD), alongside heavy capital spending by hyperscale customers, could also squeeze margins.
AI Growth Beyond China Remains Solid
Despite the setbacks in China, Nvidia continues to ride strong global momentum in AI adoption. Its Blackwell platform is seeing expanding demand from hyperscalers, sovereign AI projects, and large enterprises worldwide. The company also announced an £11 billion investment to build AI infrastructure in the U.K., underscoring its global expansion strategy.
Jensen Huang has emphasized patience in navigating geopolitical tensions, stressing that Nvidia remains supportive of both U.S. and Chinese governments as they work through policy disputes. Importantly for investors, Nvidia has guided Wall Street analysts not to include Chinese sales in financial forecasts, signaling limited near-term risk to its broader growth story.
Conclusion
Nvidia’s stock may be under pressure as U.S.-China tensions escalate, but the company’s leadership in AI hardware and global demand backdrop remain intact. While investors should brace for volatility, Nvidia’s role at the center of the AI revolution continues to provide long-term support for its growth story.
Nvidia’s stock may be under pressure as U.S.-China tensions escalate, but the company’s leadership in AI hardware and global demand backdrop remain intact. While investors should brace for volatility, Nvidia’s role at the center of the AI revolution continues to provide long-term support for its growth story.
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