Nvidia shares saw significant pre-market gains following reports that the company plans to restart shipments of its high-performance artificial intelligence chips to China. This marks a strategic reversal after months of stringent export controls, with the first deliveries tentatively scheduled for February 2025. However, this potential comeback is contingent upon complex political approvals and unfolds within an increasingly competitive local market.
Market Sentiment and Analyst Outlook
Financial institutions have responded positively to the development. The investment bank Stifel reaffirmed its Buy rating on Monday, citing Nvidia’s dominant position within AI infrastructure. Reports also indicate that Barclays has upgraded its rating on the stock. Analysts see potential for the equity to approach the $200 level once more, with the average price target standing at approximately $252 USD. This represents an upside potential of over 37%.
Not all voices are uniformly optimistic, however. Prominent investor Michael Burry has expressed concerns that Nvidia’s power-intensive chips could strain the capacity of the U.S. energy grid—a structural challenge where China, with its faster pace of power generation expansion, may hold an advantage. Market reaction to this warning has thus far been muted.
Details of the Planned Shipments
According to a Reuters report, Nvidia intends to ship the initial batch of its H200 AI chips to China starting in mid-February 2025, aligning with the period just before the Chinese New Year. This first consignment is expected to include between 40,000 and 80,000 units, equivalent to 5,000 to 10,000 server modules. The hardware will initially be sourced from existing inventory.
Should investors sell immediately? Or is it worth buying Nvidia?
This move represents a notable shift following the tight export restrictions enacted by the Biden administration. Reports suggest the Trump administration has conditionally approved the exports, albeit with a significant 25 percent tariff attached. The final green light from both Washington and Beijing remains the critical, pending step. Nvidia is not expected to allocate new production capacity specifically for Chinese orders until the second quarter of 2025.
Navigating a Shifting Competitive Landscape
The competitive dynamics in China are intensifying. Local GPU manufacturer Biren is scheduled for a Hong Kong listing on January 2, 2025, positioning itself as a direct competitor. With the H200 series—reportedly far more capable than the previously China-specific H20 chips—Nvidia aims to defend its market share against domestic rivals like Biren and Huawei.
The company’s financial footing appears robust. It reported third-quarter revenue of $57 billion USD, a year-on-year increase of 62.5%. Despite commanding a market valuation exceeding $4.4 trillion, its forward price-to-earnings ratio stands at 24.6, a level considered relatively low by historical standards.
The coming weeks will be decisive as observers await Beijing’s final approval. China may potentially seek concessions, such as requiring the parallel procurement of local chips alongside Nvidia’s hardware, as a condition for the deal.
Ad
Nvidia Stock: Buy or Sell?! New Nvidia Analysis from December 22 delivers the answer:
The latest Nvidia figures speak for themselves: Urgent action needed for Nvidia investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from December 22.
Nvidia: Buy or sell? Read more here...
