Nvidia (NVDA) has a China issue. Resolving it, its CEO says, could have bigger implications for America's AI competitiveness.
The chipmaker at the heart of the AI boom reported record quarterly sales yesterday, though its results reflected the Trump administration's export curbs, which brought sales of its H20 AI chip in China to a halt. (Investopedia's full Wednesday coverage of the results is here.)
Nvidia (NVDA) didn't include sales of the chip to China in its forecast for the current quarter either, despite recently striking a 15% revenue-sharing agreement with the Trump administration to resume sales, a deal the company says is still being ironed out. The government is unlikely to go as far as it did with Intel (INTC), taking a stake in the company, Treasury Secretary Scott Bessent has said.
Nvidia has also faced some challenges from the Chinese government, which has asked local firms to avoid using the chip, citing security concerns.
The company's results largely received a bullish reception from Wall Street analysts, though several voiced concerns about the uncertainty surrounding its China sales. "Overall the results were good, though with the guide perhaps just a hair light of the latest whispers," Bernstein analysts led by Stacy Rasgon told clients Thursday, with "continued messy China dynamics."
China sales of the H20, which had been designed to meet Biden-era export restrictions, were banned earlier this year partly on concerns that giving Chinese firms access to the chip could hurt America's position in the AI race. But the chipmaker's CEO says selling to China could be key to America's technological competitiveness -- not just Nvidia's.
"It's fairly important, I think, for the American technology companies to be able to address that market," Jensen Huang said during Wednesday's earnings call. "We just have to keep advocating the sensibility of and the importance of American tech companies to be able to lead and win the AI race and help make the American tech stack the global standard."
Huang has been pushing President Donald Trump's administration to allow greater access to the region, with some signs of success. He has argued such curbs weaken America's position by driving prospective Chinese buyers of its chips toward local rivals and shielding them from American competition.
But the company also sees big money in China.
Huang told investors yesterday he estimates China could represent a $50 billion opportunity for Nvidia this year alone, and that the figure could be set to grow 50% a year -- but only if the company is able to address it.