China Poised to Approve Nvidia's H200 Chips for Import. Here's What It Means for Investors

Core Viewpoint - Nvidia is poised for significant growth as Chinese regulators may approve the sale of its H200 AI chips, which could unlock a lucrative market previously restricted due to export limitations [2][3][5]. Group 1: Market Dynamics - Nvidia has been a key player in the AI revolution, with its GPUs being the preferred choice for AI applications [2]. - The company faced challenges due to restrictions on sales to China, one of its largest markets, impacting its overall performance [2]. - Recent reports indicate that Chinese tech giants like Alibaba, Tencent, and ByteDance are being instructed to submit orders for Nvidia's H200 chips, suggesting a potential easing of restrictions [3][5]. Group 2: Financial Implications - In 2024, sales of lower-quality AI chips to Chinese customers reached $17.1 billion, despite the absence of sales from Nvidia's advanced chips [6]. - CEO Jensen Huang noted that demand for H200 chips in China is "very high," with potential sales exceeding $50 billion annually if imports are approved [7]. - Nvidia has reportedly received orders for 2 million H200 chips at $27,000 each, which could generate $54 billion in revenue, subject to a 25% export levy, resulting in $40 billion in incremental revenue [7][8]. Group 3: Future Projections - Nvidia has not factored in sales to China in its forecasts, which could significantly enhance its outlook [10]. - The company has an AI chip sales backlog of $500 billion for the next six quarters, with expectations for this figure to grow [10]. - Analysts project Nvidia's revenue for fiscal 2027 to be $320 billion, with the potential for earnings per share (EPS) to reach $8.29, suggesting a possible share price increase to $385, representing a 105% gain from current levels [10].