Should Investors Worry About Nvidia's Future in China?

Just a few years ago, Nvidia (NASDAQ: NVDA) generated more of its revenue in China than it did in the United States. But as the artificial intelligence (AI) boom took off, the U.S. started to become a bigger and bigger source of growth for the chip designer. U.S. tech giants from Amazon to Meta Platforms ramped up their AI platforms and turned to Nvidia for its top graphics processing units (GPUs) and other products and services.As a result, Nvidia's total revenue soared, climbing in the double and triple digits quarter after quarter to reach record levels. And China was becoming a smaller and smaller part of that picture. A geographic breakdown shows Nvidia's China revenue shrank to just 16% of total sales in the fiscal 2024 year from 26% just two years earlier. And U.S. revenue soared to 44% of total sales from 16% in that time period. But this trend wasn't uniquely due to an increase in U.S. spending on AI infrastructure. This also was a result of the U.S. government's decision back in 2022 to limit exports of powerful AI tools to China.And pressure on Nvidia's prospects in China has intensified in recent times. This month, the U.S. informed Nvidia that it could no longer export the chip it specially designed for China to that country. To make matters worse, big Chinese rival Huawei may be preparing a new chip to challenge Nvidia there. Should investors worry about Nvidia's future in China? Let's find out.Continue reading

Apr 30, 2025 - 09:15

Should Investors Worry About Nvidia's Future in China?

Just a few years ago, Nvidia (NASDAQ: NVDA) generated more of its revenue in China than it did in the United States. But as the artificial intelligence (AI) boom took off, the U.S. started to become a bigger and bigger source of growth for the chip designer. U.S. tech giants from Amazon to Meta Platforms ramped up their AI platforms and turned to Nvidia for its top graphics processing units (GPUs) and other products and services.

As a result, Nvidia's total revenue soared, climbing in the double and triple digits quarter after quarter to reach record levels. And China was becoming a smaller and smaller part of that picture. A geographic breakdown shows Nvidia's China revenue shrank to just 16% of total sales in the fiscal 2024 year from 26% just two years earlier. And U.S. revenue soared to 44% of total sales from 16% in that time period. But this trend wasn't uniquely due to an increase in U.S. spending on AI infrastructure. This also was a result of the U.S. government's decision back in 2022 to limit exports of powerful AI tools to China.

And pressure on Nvidia's prospects in China has intensified in recent times. This month, the U.S. informed Nvidia that it could no longer export the chip it specially designed for China to that country. To make matters worse, big Chinese rival Huawei may be preparing a new chip to challenge Nvidia there. Should investors worry about Nvidia's future in China? Let's find out.