Investors widely welcomed the news of the resumption of exports. Nvidia's stock rose by over 4%, adding more than $200 billion to its market capitalization, settling above $4.1 trillion. Meanwhile, AMD's stock also jumped by over 6%, reaching a market cap of approximately $250 billion.
In 2022, the United States introduced a series of export controls restricting the sale of high-performance AI chips to China. These restrictions apply to graphics processing units (GPUs) exceeding specific performance thresholds. In response, Nvidia and AMD developed customized versions of GPUs for the Chinese market.
Nvidia's customized chip is named H20, which was launched in 2023, and is a lower-spec version of the company's once most powerful data center AI accelerator, the H100. AMD's corresponding product is known as the MI308.
Earlier this year, Nvidia CEO Jensen Huang revealed that export controls had halved the company's revenue in China. Even so, Nvidia's sales in China reached $17 billion in the fiscal year ended January 26.
In April of this year, the U.S. Department of Commerce notified Nvidia and AMD that the sale of customized AI chips to China would also require a license in the future, effectively equivalent to a ban on exports. Nvidia expected this move to cause a $5.5 billion loss in the fourth fiscal quarter, and AMD warned investors that it would incur an $800 million loss.
“Nvidia is applying for a license to re-sell Nvidia H20 GPUs,” the company said in a statement late Monday. “The U.S. government has assured Nvidia that it will approve the relevant licenses, and Nvidia hopes to start delivery as soon as possible.”
Nvidia also previewed a new chip, named RTX PRO, saying it is “fully compliant.” This may mean that the chip can be exported to China. Nvidia has not released the detailed specifications of this processor, only stating that it is “very suitable for digital twin AI in smart factories and logistics.”Potential Impact on Revenue and Earnings
According to Reuters, investment firm Hargreaves Lansdown expects this development to generate an additional $15 billion to $20 billion in revenue for Nvidia this year. The specific amount will depend on various factors, including the speed of export license approvals and Nvidia's ability to increase chip production to meet demand.
Bernstein estimates that every $10 billion of revenue that Nvidia recovers in the Chinese market could lead to an increase in earnings per share (EPS) of about $0.25. If the company can recover $15 to $20 billion of revenue in fiscal year 2026 (ending in January 2026), EPS could increase by $0.40 to $0.50, equivalent to an increase of more than 10% over current market expectations.
Independent research and investment institution Melius Research significantly raised its target price for Nvidia by 43%, and expects its market value to exceed $5 trillion due to the relaunch of H20 sales. The institution believes that the relaunch of H20 sales not only means that Nvidia's revenue will further accelerate in fiscal year 2026, that is, the second half of this year, but will also give the company's growth in the first half of fiscal year 2027 a "huge boost", making its "growth rate far exceed the previous consensus (expected) of 26%". By the fourth fiscal quarter of 2026, "it would not be surprising if the company recovers all or most of the $8 billion quarterly sales losses in the Chinese market."
Analysts at Citi and Jefferies also believe that the relaunch of H20 chips will benefit other related companies in the industry, especially large-scale cloud companies such as Alibaba, Tencent, Baidu, and cloud service provider Kingsoft Cloud. Jefferies analyst Thomas Chong and others pointed out that stocks sensitive to the development of artificial intelligence will also benefit, such as Kuaishou and Meitu.
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