Tariff Negotiations Could Derail Nvidia's China Business. Here's Why I'm Not Worried About It.

Core Viewpoint - New export controls and tariffs related to China could significantly impact Nvidia's revenue, which is heavily reliant on the Chinese market, but the company has potential growth opportunities in other regions, particularly in the Middle East [1][2][5]. Revenue Breakdown - Nvidia's revenue from China (including Hong Kong) is $17.1 billion, accounting for 13% of total revenue, while Singapore contributes $23.7 billion, or 18% [3]. - When considering the routing of products through Singapore, it is estimated that up to 31% of Nvidia's revenue could be affected by U.S.-China trade negotiations [5]. Growth Opportunities Outside China - Nvidia is exploring new growth opportunities in regions outside of China, particularly in the Middle East, where recent partnerships have been established [6]. - A partnership with Saudi Arabia's public investment fund, Humain, aims to deploy "several hundred thousand" Nvidia GPUs over five years for AI factories [8]. - A deal with G42 in the UAE involves supplying 100,000 chips for a new AI data center, indicating strong regional demand for Nvidia's technology [9]. Long-term Prospects - Despite potential short-term deceleration in growth due to China, the multiyear projects in the Middle East suggest a long-term commitment to AI infrastructure, which could benefit Nvidia [11]. - The importance of Nvidia's chips in the AI movement is underscored by these new deals, indicating that any loss in China may be offset by gains in other markets [14]. - Nvidia's compelling valuation and new relationships position the company favorably for investors with a long-term perspective [15].