Nvidia lost its entire China chip market, but a $20 billion CPU business is filling the gap.
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Nvidia's China revenue hits zero as Vera CPU opens $200B market
Nvidia lost its entire China chip market, but a $20 billion CPU business is filling the gap.
Nvidia's chip sales in China have fallen to zero after US export restrictions, but the company's new Vera central processing unit is opening a $200 billion addressable market that more than offsets the loss.
"Nvidia had 90-some-odd percent of the world's market share. Today in China, we have now dropped to zero," Chief Executive Officer Jensen Huang said in a recent interview.
The Vera CPU, built for AI data centers, is expected to generate nearly $20 billion in revenue this year, matching the amount Nvidia earned from China in its last full year before restrictions took hold. The chip is twice as efficient as x86-based alternatives from Intel and Advanced Micro Devices, according to Chief Financial Officer Colette Kress. Nvidia's data center business, which includes GPUs, networking and the new CPU, reached $75 billion in the fiscal first quarter, nearly doubling from a year earlier.
The CPU expansion positions Nvidia to capture a larger share of the $4 trillion in annual AI infrastructure spending Huang expects by 2030. Nvidia shares, up 7 percent this year, trade at 31 times earnings, and 95 percent of analysts rate the stock a buy.
Last fiscal year, Nvidia earned about $20 billion from China, representing 9 percent of total revenue. That figure fell by roughly half year over year in the fiscal first quarter to about $4.5 billion. While the US has approved some licenses for the H200 chip in China, Nvidia has not included any China data center sales in its forward guidance.
Vera CPU Opens a $200 Billion Opportunity
The Vera Rubin computing platform, featuring seven purpose-built chips, delivers up to 35 times higher inference throughput than the previous Blackwell architecture. It is designed for advanced reasoning and multi-step problem-solving to power agentic AI. Huang has said he sees a $200 billion addressable market for CPUs and anticipates $1 trillion in combined sales of Blackwell and Rubin GPUs across 2026 and 2027.
Market Share Gains Across AI Infrastructure
Nvidia's dominance extends beyond GPUs. The company's inference market share rose eight percentage points to 74 percent over the past year, according to The Information, defying expectations that custom chips from Amazon and Alphabet would erode its position. Networking revenue has at least doubled in each of the last three quarters, making Nvidia the largest networking company globally.
Nvidia's ability to replace lost China revenue with a new CPU business demonstrates the breadth of its AI infrastructure portfolio. The stock trades at 23 times forward earnings, a discount to its historical average, while management plans to return 50 percent or more of free cash flow to shareholders through dividends and buybacks. Baird analyst Tristan Gerra, with a $500 price target implying 147 percent upside, sees Vera Rubin sales potentially outperforming Blackwell.
This article is for informational purposes only and does not constitute investment advice.
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