NVIDIA H20 returns to the Chinese market, what investment signals does it release?

NVIDIA announced the resumption of H20 chip sales to China, driving a surge in Chinese cloud service providers and data center sectors.

On Monday, Alibaba's Hong Kong stock surged nearly 7%, while Kingsoft Cloud and GDS both rose over 10%, pushing the Hang Seng Tech Index up more than 2%.

According to CCTV News, Jensen Huang, founder and CEO of NVIDIA, announced today in an interview with CCTV reporters that the U.S. has approved the sale of H20 chips to China.

Citigroup and Jefferies analysts stated that the resumption of H20 chip sales will have a positive impact on China's internet data center industry and are optimistic about the performance of related stocks. At the same time, this news is expected to add billions of dollars to NVIDIA's revenue this year and boost the development prospects of Chinese AI-related companies.

Analysts Optimistic About Domestic Data Center Sector

Citigroup analyst Louis Tsang and others pointed out in a report that the resumption of H20 sales will positively impact China's IDC (Internet Data Center) industry, reiterating a buy rating on Century Internet and GDS.

Tsang stated that if NVIDIA can ultimately sell H20 inventory to Chinese cloud service providers, it could generate more orders and drive up Century Internet and GDS's EBITDA and revenue.

According to media reports, NVIDIA's RTX6000D shipments are expected to reach 1-2 million units in 2025, which is also favorable for related companies.

Jefferies analysts Thomas Chong and others stated in a report that NVIDIA's news is beneficial for large-scale cloud providers such as Alibaba, Tencent, and Baidu, as well as cloud service provider Kingsoft Cloud. Stocks sensitive to AI development, such as Kuaishou and Meitu, are also expected to benefit.

According to CCTV News, the U.S. government decided in April this year to prohibit NVIDIA from selling its H20 chips to the Chinese market. This was also a major reason for the previous pullback in China's internet data center sector.

What Does the Resumption of H20 Sales to China Mean for NVIDIA?

Media reports indicate that the resumption of H20 chip sales is expected to help NVIDIA recover a significant portion of the $15 billion data center revenue it previously faced risks with, including the $4-5 billion revenue originally expected in the second half of the year.

NVIDIA previously estimated that it lost up to $8 billion in revenue in the second quarter due to the ban. Bernstein believes that since there are still two weeks left in this quarter, shipments are expected to be limited, but the second half of the year may see a rapid catch-up. NVIDIA has also recorded $4.5 billion in inventory impairment, and if exports resume, some of that may be reversed.

Bernstein estimates:

For every $10 billion in revenue recovery in the Chinese market, NVIDIA could see an approximate $0.25 increase in EPS.

If it can restore revenue of $15-20 billion in FY2026 (ending January 2026), EPS is expected to increase by $0.40-0.50, which corresponds to an upside potential of over 10% compared to the current market consensus.

After the news of H20 restarting sales in China was announced, NVIDIA's stock surged nearly 5%, driving the Nasdaq up.

Bernstein expects that the Trump administration allowing NVIDIA to participate "to a limited extent" in the Chinese market will help maintain its long-term advantage in the AI ecosystem, which is also more in line with the logic of industry and risk balance.

New Custom Chips for China to Launch as Early as September?

According to The Paper, Jensen Huang will attend the third China International Supply Chain Promotion Expo (hereinafter referred to as the Chain Expo) and will meet with the media on the 16th. The third Chain Expo will open on July 16 in Beijing, marking NVIDIA's first participation.

Reports indicate that Jensen Huang will attend this Chain Expo to introduce NVIDIA's new products and reaffirm the company's long-term commitment to the Chinese market, with NVIDIA expected to launch a new version of AI chips customized for the Chinese market as early as September this year.

It is noteworthy that a previous article from Wall Street Insights mentioned that the day before his visit to China, Jensen Huang met with Trump. According to Global Times, as reported by British Reuters and Bloomberg, informed sources revealed that as Jensen Huang plans to visit China, he will meet with U.S. President Trump at the White House on the 10th local time.

Global Network pointed out that Jensen Huang has been a frequent visitor to the Chinese market and has publicly expressed the necessity for American companies to enter the world's largest semiconductor market. He has previously called for the easing of U.S. technology export restrictions.

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