Nvidia and AMD Stocks Volatile Amid U.S.-China AI Chip Deal

Nvidia and AMD are volatile due to reports of a unique arrangement requiring 15% of China-related AI chip revenue to be paid to the US government. In exchange, the companies will receive export licenses to sell their AI chips in China. Both stocks are trading green, with AMD up 39% and NVDA up 31% in 2025. Wall Street maintains a bullish stance on NVDA and a moderate buy consensus on AMD. The next big catalyst could be Nvidia's quarterly earnings report on Aug. 27, with options traders pricing in a 7.54% price swing for NVDA.

Semiconductor giants Nvidia (NVDA) and Advanced Micro Devices (AMD) are experiencing significant volatility in the wake of a unique arrangement between the companies and the U.S. government. The agreement mandates that 15% of China-related artificial intelligence (AI) chip revenue be paid to the U.S. government in exchange for export licenses to sell Nvidia's H20 and AMD's MI308 chips in China [1].

The deal, which has drawn both investor concern and curiosity, has led to a mixed reaction in the stock market. Despite the re-issuance of export licenses, both NVDA and AMD experienced slight declines in premarket trading after the revenue-sharing deal was reported [1]. NVDA's shares dropped 1.16%, while AMD's slipped 2.3% [2].

The U.S. government's unprecedented revenue-sharing model has sparked debate among legal scholars and industry experts, who raise constitutional concerns about the potential violation of the prohibition on taxes on exports [2]. However, the administration frames the 15% payment as a condition for obtaining export licenses rather than a direct tax.

For Nvidia, the potential financial implications are substantial. The company had previously estimated a potential loss of an additional $5.5 billion due to tight export controls on its H20 chips. With CEO Jensen Huang estimating $15 billion from H20 chip sales to China, the 15% cut implies a $2.25 billion payment to the U.S. government from Nvidia alone [2].

Similarly, AMD reported an $800 million charge in Q2 2025 related to restrictions on its MI308 chip sales to China. While the deal allows them to regain market access, their profitability from these specific sales will be significantly reduced [2].

The broader AI semiconductor sector remains strong, with global foundry giant Taiwan Semiconductor (TSM) projecting 30% revenue growth in 2025, supported by major tech companies' aggressive capital expenditure plans in data center expansion [1]. The AI GPU market shows no signs of slowing, with market projections reaching $352.5 billion by 2030 [1].

Wall Street maintains an overwhelmingly bullish stance on NVDA stock, with 38 out of 45 analysts rating it a "Strong Buy," while AMD holds a "Moderate Buy" consensus with a mean price target of $183.27 - about 6% higher than current prices [1]. Looking ahead, the next big catalyst for the duo could be Nvidia’s quarterly earnings report, due out after the close on Aug. 27. As of today, options traders are pricing in a bigger-than-usual 7.54% price swing for NVDA after the report [1].

References:
[1] https://finance.yahoo.com/news/options-traders-price-volatile-nvidia-135715213.html
[2] https://markets.financialcontent.com/stocks/article/marketminute-2025-8-12-us-strikes-unprecedented-chip-deal-nvidia-and-amd-to-share-china-revenue-raising-margin-concerns