Chinese tech giants ByteDance, Alibaba Group BABA, and Tencent Holdings TCEHY have reportedly placed over $16 billion in orders for Nvidia Corporation’s NVDA H20 server chips in the first quarter of 2025.
What Happened: ByteDance, Alibaba, and Tencent are collectively investing billions in Nvidia's H20 server chips, the most advanced AI processor legally available in China under U.S. export restrictions, reported Reuters (via The Information).
The surge in orders comes after the rise of DeepSeek, a Chinese AI startup known for its affordable AI models that have contributed to the high demand for Nvidia’s H20 chips.
In January 2025, DeepSeek's AI marvel triggered a major selloff in U.S. tech stocks, causing Nvidia's market value to plunge by $593 billion.
The H20 chips, which were launched after the latest round of U.S. export controls in October 2023, are critical for Chinese firms striving to advance their AI capabilities.
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Why It Matters: Last month, reports indicated that Chinese companies were grappling with chip shortages due to U.S. sanctions. H3C, a key server manufacturer, highlighted the depletion of Nvidia’s H20 chip inventory, raising concerns about supply chain disruptions.
Chinese firms are exploring alternatives to reduce reliance on Nvidia. In March, Qingcheng.AI introduced “Chitu,” a framework designed to operate on Chinese-made chips, aiming for technological self-sufficiency.
Huawei Technologies has also been advancing its AI chip capabilities, with Nvidia CEO Jensen Huang acknowledging the company's competitive edge.
Despite these challenges, China remains a crucial market for Nvidia, contributing significantly to its revenue. In 2024, Nvidia generated $12 billion in revenue from China, selling twice as many AI chips as Huawei's Ascend 910B.
Price Action: Nvidia's stock has declined 20.16% year-to-date, but over the past 12 months, it has gained 24.12%, according to Benzinga Pro data.
Benzinga Edge Stock Rankings gives Nvidia (NVDA) a 94.90% growth rating. If you are interested in seeing how it stacks up against other companies, click here for the full analysis.
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