While the broader technology sector faces headwinds, Nvidia is grappling with a supply challenge many companies would envy: demand is vastly outstripping current capacity. This situation follows a significant policy reversal in Washington, which now permits the export of high-performance chips to China under specific conditions. The semiconductor leader is consequently examining a rapid production scale-up to meet anticipated demand from the Far East.
A $500 Billion Backlog and Robust Fundamentals
The long-term outlook for Nvidia remains decidedly strong, underscored by an astonishing $500 billion backlog for its AI infrastructure, encompassing the Blackwell and Rubin product lines for 2025 and 2026. This exceptional visibility into future revenue is a cornerstone of analyst optimism. Bank of America reiterated its Buy rating today, affirming a price target of $275 per share.
The company’s technological dominance is further validated by recent partnerships; it was confirmed that OpenAI’s newly released GPT-5.2 model, announced Thursday, was trained on Nvidia systems. Trading with a forward P/E ratio of approximately 29, the stock sits well below the sector average of 46, suggesting a relatively moderate valuation given its projected growth trajectory.
Ramping Up H200 Chip Production
According to a Reuters report published Friday, Nvidia is currently evaluating an expansion of manufacturing for its H200 AI chips. This move is a direct response to a massive surge in demand from major Chinese clients, including tech giants Alibaba and ByteDance, who have signaled interest in large-volume orders that existing supply cannot satisfy.
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This opportunity stems from a decision by US President Donald Trump, who earlier this week authorized exports of the H200 chip to approved Chinese customers. The authorization comes with a notable financial stipulation: a 25% levy on profits from these sales, payable directly to the US Treasury. For Chinese buyers, the deal remains compelling as the H200 offers roughly six times the performance of the H20 chip, which was previously developed specifically for the Chinese market.
Sector Sentiment Weighed Down by Oracle
Despite these positive developments for its China business, Nvidia’s shares traded slightly lower on the day. The decline of 0.34% is less related to company-specific news and more attributable to external sector pressures. A sharp drop of over 10% in software giant Oracle’s stock has dampened sentiment across the technology sector, pulling other major players down in tandem.
From a technical perspective, Nvidia’s position remains robust. The equity continues to trade near its 52-week high and maintains a stable footing above its key long-term trend lines. Investors are now focused on the timeline for bringing the additional manufacturing capacity online to serve the Chinese market.
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