Nvidia Faces New China Risks -- Should Investors Stay the Course?

Core Viewpoint - Nvidia is facing new challenges regarding its H20 chips due to geopolitical tensions, particularly with Beijing, which may impact its stock performance and sales in the Chinese market [1][5]. Group 1: H20 Chip Developments - Nvidia's H20 chips were designed for the Chinese market to comply with U.S. export restrictions on advanced AI chips, leading to a $4.5 billion inventory charge in Q1 of fiscal 2026 due to sales limitations [3]. - A deal was struck with the Trump administration allowing Nvidia to access Chinese markets in exchange for 15% of revenues from H20 sales [4]. - Beijing has requested tech companies not to use H20 chips for government purposes and inquired about potential tracking technology in the chips, which Nvidia has denied [5][6]. Group 2: Earnings Expectations - Nvidia is expected to report Q2 fiscal 2026 earnings on August 27, with analysts predicting earnings per share of $1.01, a 48.5% increase from $0.68 per share a year ago, and a revenue estimate of $46.12 billion, up 53% from the same quarter last year [9]. - Nvidia holds over 90% market share in the GPU market, and major customers plan to increase spending on data centers, positioning the company favorably for the upcoming earnings report [10]. Group 3: Analyst Sentiment - Despite recent challenges, analysts have raised their price targets for Nvidia stock, indicating confidence in the company's future performance [11].