Nvidia's GPU Sales at Risk As China Pushes Local AI Chips in Retaliation

Nvidia Corp’s NVDA H20 graphics processing unit (GPU) revenue could be affected by China’s prioritization of domestic-made artificial intelligence (AI) chips.

China has informally urged its companies to leverage domestic AI chips over those from Nvidia, SCMP cites familiar sources. The stock is trading lower on Monday.

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The Asian country ordered its companies to prioritize Huawei Technologies chips instead.

Reports indicating China’s retaliation against the U.S. semiconductor embargo on the Asian country started emerging in May. The U.S. cited national security reasons for the sanctions.

According to official records, China committed 43.5 billion yuan ($6.12 billion) to computing data centers.

Prior reports said Chinese AI developers bypass U.S. sanctions by leveraging blockchain technology via overseas data centers. China also resorted to smuggling Nvidia chips.

Recently, Alibaba Group Holding’s BABA cloud computing services unit collaborated with Nvidia to boost the autonomous driving experience for Chinese smart vehicle owners. The Chinese hyperscalar had previously acknowledged the severe impact of US sanctions on its AI ambitions.

Nvidia can earn $12 billion in sales from 1 million H20 GPUs in China in 2024. Nvidia acknowledged China as its third-largest market in its financial year, which ended January 28.

Investors can gain exposure to Nvidia through SPDR Select Sector Fund – Technology XLK and iShares S&P 500 Growth ETF IVW.

Will Nvidia Stock Go Up?

When trying to assess whether or not NVIDIA will trade higher from current levels, it's a good idea to take a look at analyst forecasts.

Wall Street analysts have an average 12-month price target of $152.76 on NVIDIA. The Street high target is currently at $200.0 and the Street low target is $90.0. Of all the analysts covering NVIDIA, 32 have positive ratings, 2 have neutral ratings and no one has negative ratings.

In the last month, one analyst has adjusted price targets. Here's a look at recent price target changes [Analyst Ratings]. Benzinga also tracks Wall Street's most accurate analysts. Check out how analysts covering NVIDIA have performed in recent history.

Stocks don't move in a straight line. The average stock market return is approximately 10% per year. NVIDIA is 159.34% up year-to-date. The average analyst price target suggests the stock could have further upside ahead.

For a broad overview of everything you need to know about NVIDIA, visit here. If you want to go above and beyond, there's no better tool to help you do just that than Benzinga Pro. Start your free trial today.

Price Action: NVDA stock is down 0.43% at $124.38 premarket at last check Monday.

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