Nvidia vs. AMD: Who Truly Benefits from Trump's 15% China AI Chip Revenue Cut?

The U.S.-China tech cold war has entered a new phase, with President Donald Trump's 15% revenue-sharing agreement for AI chip sales to China reshaping the semiconductor landscape. This policy, which requires Nvidia and AMD to cede 15% of their China AI chip revenues to the U.S. Treasury in exchange for export licenses, has sparked fierce debate about its long-term implications for both companies. For investors, the question is clear: Which firm—Nvidia or AMD—is better positioned to thrive amid this high-stakes geopolitical and financial experiment?

The Revenue-Sharing Mechanism: A Double-Edged Sword

The Trump administration's policy targets two key chips: Nvidia's H20 and AMD's MI308. While the 15% cut is a direct hit to margins, it also grants access to China's $23 billion AI chip market—a lifeline for both firms. For Nvidia, this means selling 1.5 million H20 units in 2025, generating $23 billion in revenue, but surrendering $3.45 billion to the U.S. government. AMD, which derives 25% of its revenue from China, faces a similar burden, though exact figures for MI308 sales remain undisclosed.

The immediate financial impact is stark. Nvidia's gross margins, already robust at 74.6% in Q3 2025, could dip by 5–15 percentage points due to the 15% fee. AMD, with narrower margins (~50%), is even more vulnerable. However, both companies have responded with strategic recalibrations.

Nvidia: Pricing Power and R&D as Strategic Bulwarks

Nvidia's response to the revenue cut has been twofold: aggressive R&D investment and pricing power. The company increased operating expenses by 39% in 2025, with $3.7 billion allocated to R&D, focusing on next-generation Blackwell accelerators and CUDA ecosystem dominance. This positions Nvidia to maintain its lead in AI infrastructure, even as margins face pressure.

Moreover, Nvidia has leveraged its market power to offset the 15% fee. By raising prices on high-end GPUs by 15%, the company has preserved profitability. For example, the Blackwell platform's $15,000-per-chip pricing model ensures that even after the revenue cut, gross margins remain in the 65–75% range.

Nvidia's diversification strategy further insulates it from China-specific risks. The company has expanded into sovereign AI projects in Denmark, Japan, and India, reducing reliance on any single market. This global footprint, combined with its CUDA software moat, creates a durable competitive edge.

AMD: Margin Compression and Strategic Uncertainty

AMD's situation is more precarious. The company's Q2 2024 results already reflected the financial toll of U.S. export restrictions, with an $800 million charge linked to MI308 inventory. The 15% revenue cut exacerbates this, potentially reducing gross margins by 5–15 percentage points. Unlike Nvidia, AMD lacks the pricing power to fully offset the fee, leaving it with fewer options to absorb margin compression.

AMD's capital allocation strategy is now constrained. While the company could pass some costs to Chinese customers, Beijing's push for domestic alternatives like Huawei's AI chips limits pricing flexibility. This forces AMD to either invest heavily in China-specific R&D (a costly endeavor) or risk losing market share to local competitors.

Geopolitical Risks and Future Policy Shifts

The Trump administration's policy is not static. The president has hinted at expanding the revenue-sharing model to more advanced chips, such as Nvidia's Blackwell, with potential cuts of 30–50%. This creates regulatory uncertainty, which could deter long-term R&D investment. However, Nvidia's aggressive R&D spending and global diversification make it better equipped to navigate such shifts.

AMD, meanwhile, faces a steeper challenge. Its reliance on China for 25% of revenue makes it more susceptible to policy volatility. If the U.S. government tightens restrictions further, AMD's margins could erode faster than Nvidia's.

Investment Implications: Nvidia's Strategic Edge

For investors, the key differentiator lies in profit resilience and strategic flexibility. Nvidia's pricing power, R&D focus, and global diversification create a moat that AMD lacks. The company's ability to maintain high margins despite the 15% cut, coupled with its leadership in the CUDA ecosystem, positions it as a long-term winner in the AI race.

AMD, while benefiting from renewed access to China, remains exposed to margin compression and geopolitical risks. Its capital allocation is less flexible, and its reliance on a single market makes it a riskier bet in a fragmented global landscape.

Conclusion: A Clear Winner in the AI Era

The Trump administration's 15% revenue-sharing policy is a high-stakes gamble for both Nvidia and AMD. However, Nvidia's strategic depth—rooted in R&D, pricing power, and global diversification—makes it the stronger long-term investment. As the AI and semiconductor industries evolve, Nvidia's ability to adapt to regulatory shifts and maintain its technological lead will likely outpace AMD's. For investors seeking resilience in a volatile market, the choice is clear: Nvidia's stock offers a stronger strategic edge.