China Orders Tech Giants to Halt Nvidia AI Chip Purchases—Will NVDA’s AI Boom Stall or Surge Back?

by | Sep 17, 2025 | Market News | 0 comments

Introduction

The escalating U.S.–China tech war just intensified. According to the Financial Times, China’s Cyberspace Administration (CAC) has ordered top tech companies—including Alibaba and ByteDance—to stop buying Nvidia’s advanced AI chips and cancel existing RTX Pro 6000D orders. This surprise directive sent Nvidia (NASDAQ: NVDA) shares down over 1% in premarket trading, igniting fears of a major revenue hit to one of the world’s hottest AI plays.

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Financial Performance

Despite regulatory headwinds, Nvidia remains a profit machine:

  • FY2025 Revenue: Expected to exceed $120B, driven by AI data center demand.
  • Gross Margin: Above 74%, highlighting pricing power.
  • Cash Reserves: Over $30B, providing flexibility to navigate geopolitical shocks.

Key Highlights

  • Fresh Ban: CAC orders ByteDance, Alibaba, and others to halt purchases of Nvidia’s RTX Pro 6000D chip—stronger than earlier guidance targeting the H20.
  • Existing Orders Canceled: Companies that planned to buy tens of thousands of chips have already stopped testing and verification.
  • Trade War Tensions: The move follows China’s recent anti-monopoly probe into Nvidia.

Profitability and Valuation

  • Forward P/E: ~35x—rich, but justified by AI growth.
  • Revenue Exposure: China accounts for an estimated 20–25% of Nvidia’s data center sales, making this ban material.
  • Valuation Risk: A prolonged ban could compress multiples if growth slows.

Debt and Leverage

Nvidia carries minimal debt, giving it room to absorb lost revenue and pivot supply chains if necessary.

Growth Prospects

  • Domestic Substitution: China’s move could accelerate local chip development, threatening long-term market share.
  • Global AI Demand: U.S., Europe, and Middle East hyperscalers remain strong buyers, partially offsetting Chinese weakness.
  • New Product Lines: Next-gen GPUs and custom AI accelerators provide alternative growth channels.

Technical Analysis

  • Short-Term (1–3 weeks): Support at $165, resistance near $180. A break below $165 could trigger a slide toward $150.
  • Medium-Term (3–6 months): If global AI demand holds, NVDA could rebound to $200–210.
  • Long-Term (12+ months): Continued AI adoption keeps a bull case alive for $250+, assuming export markets stay open.

Potential Catalysts

  • U.S. government response or countermeasures.
  • Earnings guidance updates highlighting demand outside China.
  • Breakthroughs in chip export licensing or trade negotiations.

Leadership and Strategic Direction

CEO Jensen Huang remains focused on diversifying Nvidia’s supply chain and customer base, while doubling down on AI software and data center ecosystems to mitigate geopolitical risk.

Impact of Macroeconomic Factors

  • Trade Policy: Escalating U.S.–China tensions threaten semiconductor supply chains.
  • Interest Rates: A dovish Fed supports tech valuations despite geopolitical shocks.
  • Currency Fluctuations: A weaker yuan could further dampen Chinese demand.

Total Addressable Market (TAM)

Global AI chip spending is projected to exceed $400B by 2030. Even with China’s ban, Nvidia retains a dominant share in U.S., European, and Middle Eastern AI infrastructure projects.

Market Sentiment and Engagement

Options markets show elevated put activity as traders hedge downside risks. However, long-term bulls see the selloff as a potential buying opportunity given Nvidia’s technological lead.

Conclusions, Target Price Objectives, and Stop Losses

Time FrameTarget PriceStop Loss
Short-Term (1–3 weeks)$175–180 (if support holds)$160
Medium-Term (3–6 months)$200–210$155
Long-Term (12+ months)$250+ (AI demand offsets China ban)$150

Traders may consider accumulating on dips near $165 while employing tight stops to manage volatility.

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