Chinese firms remain keen on buying Nvidia (NVDA) chips even as Beijing regulators press them to scale back. According to a Reuters report, companies including Alibaba (BABA) and ByteDance are still placing orders for Nvidia’s H20 chip. They want confirmation that their requests are being handled and are also watching closely for the arrival of a more advanced model.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The H20, which sells for $10,000 to $12,000 per unit, was cleared for sale in China earlier this year after the U.S. approved a downgraded design. Sources told Reuters that Nvidia is preparing a new chip, tentatively called the B30A, which may offer up to six times more power than the H20. If Washington signs off on exports, the B30A could be priced at nearly double the H20. Even at that level, Chinese firms view it as worthwhile due to the performance gain.
U.S. and China Policies
The U.S. has taken a step back from stricter curbs that would have cut Nvidia out of the Chinese market. Officials agreed to let sales of limited models proceed while also securing a deal that directs 15% of H20 revenue in China to the U.S. government. Nvidia and other industry voices have argued that keeping Chinese firms in its ecosystem is better than losing them fully to rivals such as Huawei.
Meanwhile, Chinese officials have expressed their concerns. Regulators have met with companies, including Tencent (TCEHY) and ByteDance, to ask why they are still purchasing U.S. chips. Yet, so far, they have not barred firms from continuing to buy from Nvidia. Supply limits at domestic providers such as Huawei and Cambricon have kept Nvidia’s products in high demand.
Market Impact
China made up 13% of Nvidia’s revenue in the last fiscal year. The lack of certainty about future sales led Nvidia to issue a cautious forecast in August that excluded potential gains from the Chinese market. Since then, shares have slipped about 6%.
Nvidia Chief Executive Jensen Huang has told clients that the supply of H20 remains on track. Reuters also reported that Nvidia holds between 600,000 and 700,000 H20 units and has asked Taiwan Semiconductor Manufacturing Company (TSM) to make more. Accordingly, samples of the B30A could reach Chinese buyers as soon as this month. Nvidia has stated that the Chinese market could be worth $50 billion if it can deliver products that remain competitive. For now, the balance of policy limits and strong demand will guide its path in the region.
Is Nvidia Stock a Buy, Sell, or Hold?
On the Street, Nvidia continues to boast a bullish sentiment among analysts, with 35 out of 39 analysts rating the stock a Buy, giving Nvidia a Strong Buy consensus. The average NVDA stock price target is $211.14, implying an upside of 23.75% from the current level.
