Nvidia Stock to Resume China Sales as Export Restrictions Lifted

Nvidia expects to resume sales of AI chips in China, reversing a previous export ban. The company's H20 chips are designed for the Chinese market, and management projects a significant rebound in FQ3. Analyst Sebastien Naji estimates incremental $0.30 in EPS for fiscal 2026, assuming China revenue reaches around $20 billion. Naji rates NVDA shares an Outperform (i.e., Buy).

Title: Nvidia Resumes AI Chip Sales in China, Projecting Significant Revenue Growth

Nvidia Corp. is set to resume sales of its AI chips in China, reversing a previous export ban. The company's H20 chips, designed specifically for the Chinese market, are expected to significantly boost Nvidia's financial performance in the third fiscal quarter (FQ3) [1]. Management projects a substantial rebound in sales, with analyst Sebastien Naji estimating an incremental $0.30 in earnings per share (EPS) for fiscal 2026, assuming China revenue reaches around $20 billion [1]. Naji rates NVDA shares as an Outperform, advising investors to buy [1].

The reversal comes after Washington provided assurances that export licenses for Nvidia's H20 artificial intelligence accelerator would be approved. This move restores Nvidia's ability to fulfill orders previously written off due to government restrictions. The H20 chips were designed to comply with earlier China trade curbs from Washington, which had tightened in April to block sales without a US permit [1]. Nvidia's CEO Jensen Huang met with President Donald Trump last week and is currently in Beijing, where he appeared on Chinese state broadcaster CCTV to announce the decision [1].

The Commerce Department, which oversees US export controls on chips and the tools used to make them, has not yet responded to requests for comment on whether the agency has already issued any H20 licenses. However, the move reflects a thawing of relations between Washington and Beijing, guided by an opaque trade truce designed to see both sides approve exports of crucial technologies [1]. The US move also comes after weeks of lifting export controls on chip design software in return for China allowing more sales of rare-earth minerals needed to make high-tech products [1].

The H20 chip shipments will benefit companies like DeepSeek and Alibaba Group Holding Ltd., which seek Nvidia hardware to train, expand, and operate their AI services. The resumption of sales is expected to positively impact the AI semiconductor supply chain and China tech platforms building AI capabilities [1]. Alibaba's shares rose as much as 6% in Hong Kong on Tuesday, following the announcement [1].

Nvidia's China comeback is a significant development for the company and the broader AI ecosystem. The move underscores the importance of the China market for Nvidia, which has faced restrictions on sales to the country since 2022. The company has designed new processors for the China market several times to comply with these measures, which have become a central point of tension between Washington and Beijing [1]. Nvidia's loss of market share in China from 95% to 50% directly benefits Huawei, the Shenzhen-based hardware giant at the center of Beijing's tech ambitions [1].

The US first restricted Nvidia's China sales in 2022, with sweeping curbs designed to prevent the Asian country from accessing advanced AI that could benefit the Chinese military. Nvidia's H20 chips are considered less advanced than its top-of-the-line products, making them more compliant with export restrictions [1]. The company's CEO has been vocal about the need for global AI advancement and has warned that Nvidia's loss of market share in China directly benefits Huawei [1].

Nvidia's H20 chip shipments to China could recover a substantial portion of the $15 billion in fiscal 2026 data center revenue previously at risk, including $4-5 billion originally expected in the second half of the year (2H) and part of the $8 billion in unshipped 2Q orders [1]. The resumption of sales is a major win for Nvidia, which has been advocating for the resumption of exports to China for months [1]. The move also reflects the company's central role in providing the hardware for a post-ChatGPT AI infrastructure building boom, as Nvidia reached a market value of $4 trillion last week [1].

References:
[1] https://finance.yahoo.com/news/nvidia-resume-h20-ai-chip-064336947.html
[2] https://news.bloomberglaw.com/ip-law/nvidia-to-resume-h20-ai-chip-sales-to-china-in-us-reversal-2
[3] https://www.forbes.com/sites/sasirekhasubramanian/2025/07/15/nvidia-the-chips-are-falling-into-place/