Nvidia's China ban effectively hands country's AI market to Huawei, says Bernstein's Stacy Rasgon

Nvidia and China Market - Nvidia faces potential loss of $50 billion in revenue due to being shut out of the Chinese market, but this has already been factored into their financial models [2][3] - If Nvidia is banned from selling into China, the Chinese AI market will effectively be handed over to Huawei [5] - Banning Nvidia encourages Chinese customers to invest in the Huawei ecosystem, potentially leading Huawei to expand sales beyond China [7] - Nvidia had previously removed $8 billion from China in its guidance, indicating the overall market size is still substantial [9] Nvidia's Growth and Valuation - The market is large enough for Nvidia to grow significantly even without access to the Chinese market [5][8] - Nvidia's valuation is not considered aggressive, with a price-to-earnings ratio in the mid to upper 20s based on next 12-month earnings [12][13] Semiconductor Sector Dynamics - There is a rotation occurring within the semiconductor sector, with non-AI chip companies like Texas Instruments and Intel gaining some traction [10] - Some investors are playing a cyclical recovery in companies like Texas Instruments, although it's uncertain if this is a genuine recovery or due to inventory stocking or tariff pull-forward [11][12] - Despite the cyclical recovery play, the analyst still prefers AI-related stocks, particularly Nvidia, due to eased Blackwell supply constraints and China being zeroed out [12]