TLDR
- Nvidia stock is up 0.5% in after-hours trading but down about 1% over the past three months as investors await clarity on chip sales
- CEO Jensen Huang confirms Nvidia is experiencing “very high” demand in China for H200 chips and production has resumed
- Nvidia already has orders for over 2 million H200 chips valued at approximately $54 billion
- The U.S. government has recently indicated approval for H200 exports to China with a requirement for a 25% payment to the government
- Elon Musk’s xAI completed a $20 billion funding round and plans to expand its data center to include one million Nvidia GPUs
Nvidia shares are holding steady while the broader AI trade gains momentum. The stock saw a 0.5% increase in after-hours trading on Tuesday but has declined by approximately 1% over the last three months.
Investors have not lost confidence in AI; they are simply awaiting concrete developments. Specifically, they are looking for confirmation that Nvidia can indeed ship its H200 chips to China or secure significant new orders from U.S. companies.
The memory chip sector is currently experiencing a boom. Companies like [Company Name – implied from context, not explicitly stated in original text] have seen gains exceeding 27%. However, Nvidia shareholders have already factored in the success of the latest Vera Rubin hardware for domestic markets.
The primary uncertainty lies with China. The question is whether Beijing will permit its technology firms to purchase Nvidia’s chips in large quantities.
CEO Jensen Huang addressed this matter on Tuesday at CES in Las Vegas. He informed reporters that the company has restarted H200 production. “We’ve fired up our supply chain, and H200s are flowing through the line,” Huang stated.
The final licensing details with the U.S. government are still being finalized. However, Huang expressed confidence that these will be resolved soon.
The $54 Billion Opportunity
The financial implications of the China market are substantial. Nvidia has already secured orders for over 2 million H200 chips, priced at $27,000 per unit. This represents a potential revenue stream of approximately $54 billion.
Reuters had previously reported on the existence of these orders. The critical factor is whether Chinese buyers will be permitted to finalize these purchases.
In December, President Donald Trump indicated that [Company Name – implied from context, not explicitly stated in original text] could export the H200 to China. However, there is a condition: the company must remit 25% of these sales to the U.S. government.
The H200 is not Nvidia’s most recent model; it is one or two generations behind the cutting edge. Nevertheless, unlike previous China-approved chips, this particular model has not been intentionally throttled to comply with export restrictions.
Waiting on Purchase Orders
Huang does not anticipate Beijing issuing a formal announcement regarding import approvals. Instead, he expects Nvidia to ascertain the regulatory status as purchase orders begin to be placed.
“We’re not expecting any press releases, or any large declarations,” Huang explained. “It’s just going to be purchase orders.”
Huang had previously estimated the Chinese market could be worth $50 billion annually. None of this revenue is currently incorporated into Nvidia’s financial forecasts.
Any H200 sales to China would be in addition to the $500 billion two-year forecast the company provided last year. “It appears that we’re going to be going back to China,” Huang remarked.
Musk’s xAI has just concluded a Series E funding round totaling $20 billion, surpassing its initial $15 billion target. The company operates a data center near Memphis, powered by over 200,000 Nvidia chips that support the Grok AI chatbot.
The facility has plans to eventually house at least one million graphics processing units. This represents another significant potential order book for Nvidia, should the expansion proceed as planned.
