Nvidia is caught in Trump's China trade war, and it could impact the stock market

"What they're saying: "We need [China] more than they need us," Paul Meeks, managing director and head of technology research at Freedom Capital Markets, tells Axios. CEO Jensen Huang sees the Chinese market as a $50 billion opportunity that could grow 50% per year. That's why investors want the doors to that market wide open. Catch up quick: The Trump administration barred exports of Nvidia's H20 chips to China in April."

"The ban was reversed in July after the Nvidia CEO visited the White House and agreed to give a 15% cut of revenue from China chip sales to the U.S. government. Nvidia still can't sell its most powerful chips to China, though it is urging the U.S. government for approval. By the numbers: Export controls pressured its data center revenue, which came in just below Wall Street estimates, at $41.1 billion. Part of that was due to a $4 billion reduction in H20 chip sales."

"State of play: Nvidia CFO Colette Kress said the company would ship between $2 billion and $5 billion worth of H20 chips in the current quarter. The company gets half of its data center revenue from large cloud service providers, which happen to be the other biggest companies in the S&P 500. All of those companies have already committed to record AI spending, which could translate to upside for Nvidia."

Nvidia views the Chinese market as a major growth opportunity, estimated at $50 billion and potentially growing 50% annually. U.S. export controls on H20 chips temporarily barred sales to China and later were partially reversed under terms that include a 15% revenue cut. The company still cannot sell its most powerful chips to China and is seeking further approvals. Export restrictions reduced data-center revenue to $41.1 billion, including about $4 billion in lost H20 sales. Nvidia expects $2–5 billion in H20 shipments this quarter and derives half of data-center revenue from large cloud providers committed to record AI spending. Nvidia comprises roughly 8% of the S&P 500, creating potential market-wide ripple effects from trade controls.

Read at Axios