When news broke that the U.S. government approved Nvidia’s sales of powerful H200 AI chips to China, investors didn’t waste time showing their excitement. The stock jumped 2.5% as traders rushed to buy shares, treating the announcement like finding an extra slice of pizza in the box.
The approval comes with strings attached, though. Chinese customers will pay a 25% tariff on top of regular prices, and only approved buyers can make purchases. Think of it like getting permission to shop at an exclusive store, but everything costs more and you need special membership.
Still, Wall Street seems thrilled about reopening this massive market.
Analysts are practically doing cartwheels over the revenue potential. Some predict Nvidia could rake in $25 to $30 billion annually from renewed China access. That’s serious money, even for a company already swimming in AI profits.
Data centers hungry for high-end graphics chips represent a goldmine, especially with Nvidia’s newest Blackwell and H200 families leading the pack. The H200 chip’s superior specs make it particularly attractive to Chinese buyers compared to the previous H20 series.
The enthusiasm shows in updated price targets too. Analyst consensus averages now hover around $252 to $258, with roughly 39 out of 41 analysts maintaining buy or strong-buy ratings.
Pre-market trading saw similar 2% gains, while prediction markets assigned higher odds to stock prices hitting $190 to $200 by year-end. Market expectations indicate a 57% chance Nvidia stock will reach near $200 by December 31, 2025.
However, this celebration might face some party crashers. Congress could spoil the fun with bipartisan legislation threatening to block shipments again. Political winds change quickly in Washington, creating uncertainty that makes some investors nervous despite current optimism.
The approval extends beyond Nvidia, covering similar products from AMD and Intel. This suggests broader semiconductor industry benefits, potentially boosting related ETFs and chip-focused funds as money flows into the sector. Central banks worldwide monitor how sector rotation affects overall market stability as capital shifts between different industry groups.
For now, investors seem willing to bet that volume gains will offset margin pressure from those hefty tariffs. Nvidia’s recent quarterly results already showed massive year-over-year growth in AI and data-center revenue before this China news hit.
Adding billions more in potential sales creates an appealing growth story, assuming political headwinds don’t derail the momentum.
