Could Nvidia's Sales Drop 30% due to a Trade War Between the U.S. and China?

Core Insights - Nvidia's stock has declined over 30% since the beginning of 2025, resulting in a loss of over $1 trillion in market capitalization, despite strong growth in its end markets, particularly in data center revenue linked to AI [1] Revenue Exposure - Up to 30% of Nvidia's revenues are at risk due to the ongoing U.S.-China trade war, with potential impacts from new export licensing requirements for AI chips intended for China [2][3] - Approximately 14% of Nvidia's sales in the last quarter originated from China, but this figure may underrepresent the actual contribution due to indirect sales through Singapore [3][4] Market Dynamics - Singapore accounts for 18% of Nvidia's sales, but less than 2% of these sales are directly exported there, indicating that many shipments likely end up in China, potentially raising China's contribution to Nvidia's revenue to around 30% [4] - Chinese firms have placed over$ 16 billion in orders for Nvidia's H20 chips in the first 90 days of 2025, all of which are now at risk due to new licensing rules [7] Competitive Landscape - Local competitors in China, such as Huawei, are investing heavily to capture Nvidia's market share, which could lead to significant long-term challenges for Nvidia even if current regulations are relaxed [7][8] - The valuation of Nvidia's shares has decreased from 30 times sales at the start of 2025 to 18.4 times trailing sales and 11.7 times forward sales, suggesting that some risks may already be priced in [8]