A high-stakes trip to Beijing by Nvidia’s CEO has investors pricing in a potential thaw in US-China chip trade, adding fuel to a stock already up 74 percent over the past year.
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Nvidia Stock Gains 13% as CEO Signals China Chip Thaw
The appearance of Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang alongside President Donald Trump on a diplomatic mission to China is forcing investors to re-evaluate the company’s China risk. Huang’s subsequent comments anticipating an eventual reopening of the market to U.S. AI chips have added a new layer of complexity to a stock sitting at the heart of geopolitics and the global AI buildout.
"I anticipate that China will eventually allow imports of AI chips from the US," Huang said after the visit, expressing confidence that the market will open over time despite current restrictions from both Washington and Beijing.
The comments follow a trip where Huang was a late addition to the presidential delegation, fueling speculation of a breakthrough for Nvidia’s H200 AI processors. The stock, which recently traded at $235.74, has rallied 13.3 percent in the last 30 days on the news. The move comes as President Trump’s financial disclosures revealed a personal holding in Nvidia worth between $1 million and $5 million, adding a unique political dimension to the trade talks.
At stake for Nvidia is a market opportunity potentially worth over $12 billion in quarterly revenue that is currently excluded from official guidance. For investors, the question is whether the potential for renewed China sales justifies a premium valuation, with the stock trading at 46 times trailing earnings and 21% above Simply Wall St’s estimated fair value.
The Bull Case: A $12.5 Billion Question
The bull case centers on what is currently left out of Nvidia’s financial forecasts. The company’s Q1 FY2027 revenue guidance of approximately $78 billion explicitly assumes zero data center compute revenue from China. One analyst report from 24/7 Wall St. notes that this leaves a potential $12.5 billion in H200 and H20 revenue as pure upside if the Trump-Xi talks result in a favorable carve-out for Nvidia. This potential is bolstered by strong underlying demand, with Nvidia’s Q4 FY2026 Data Center revenue surging 75 percent year-over-year to $62.31 billion, driven by hyperscaler capex from firms like OpenAI, Anthropic, and Meta.
The Bear Case: Valuation and Homegrown Threats
The counterargument is grounded in valuation and competition. With a market capitalization hovering around $5.7 trillion, shares have rallied 74.22 percent over the past year, leading to concerns of retail euphoria. The stock’s trailing P/E of 46x is steep, even with a forward multiple of 27x reflecting expectations of sharp earnings growth. Furthermore, the China upside thesis is not without its own risks. Beijing has been accelerating its domestic chipmaking capabilities, with companies like Alibaba, Tencent, and Zhipu making strides in developing homegrown AI chips, which could create competitive headwinds even if the market reopens.
This article is for informational purposes only and does not constitute investment advice.
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