Analysts at Jefferies Financial Group (JEF) doubt there will be strong demand for Nvidia’s (NVDA) H200 artificial intelligence (AI) microchip in China.
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U.S. President Donald Trump has granted approval for Nvidia to sell its H200 processors to China in exchange for 25% of all sales going to the U.S. government. However, Jefferies says in a note to clients that it’s unclear whether Chinese buyers will take up the offer and actually by Nvidia’s H200 chip, which is the second-best AI processor on the market today.
Jefferies’ skepticism is based on the fact that government officials in Beijing are focused on domestic alternatives to U.S. technology. As a result, there is a lot of uncertainty over how much demand China will show for Nvidia’s H200 AI chip after Trump cleared the product for sale to the Asian nation.
AI Independence
According to Jefferies, China is likely to prioritize AI independence over supremacy and is likely to keep directing capital toward local chipmakers rather than rely on foreign hardware from American companies such as Nvidia.
The current situation is further complicated by the fact that Chinese AI model performance continues to advance. Jefferies notes that China has managed to steadily progress its AI technologies despite U.S. chip restrictions and lower capital spending over the past two years. Jefferies adds that China faces no structural power constraint on AI data center growth, leading to rapid expansion and advancement.
Jefferies concludes by stating that China will account for 35% of global data center power use by 2030 and the country’s power costs remain well below U.S. levels.
Is NVDA Stock a Buy?
The stock of Nvidia has a consensus Strong Buy rating among 41 Wall Street analysts. That rating is based on 39 Buy, one Hold, and one Sell recommendations issued in the past three months. The average NVDA price target of $258.00 implies 41.17% upside from current levels.
