Morningstar

Nvidia: Approval to Sell H200 AI Accelerators Into China Appears Forthcoming

The approval is a good first step for Nvidia to get back into the business of selling AI GPUs into China

The Nvidia logo is displayed on headquarters.
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NVIDIA Corp
(NVDA)

Key Morningstar Metrics for Nvidia

In a Dec. 8 Truth Social post, US President Donald Trump said the US will allow Nvidia NVDA to sell its roughly two-year-old artificial intelligence graphics processors, or GPUs, the H200, into China. The US government will reportedly receive a 25% cut on all sales, versus prior discussions of a 15% cut.

Why it matters: The approval is a good first step for Nvidia to get back into the business of selling AI GPUs into China. The US has gone back and forth on restrictions, and may do so again in the future, but now we foresee at least a path to meaningful future AI revenue from China.

  • Recently, the Chinese government has nudged its AI developers to shy away from Nvidia parts, so there’s no guarantee that the H200 will be widely adopted by the Chinese ecosystem versus domestic parts, even though the H200 is superior to the previously approved H20.
  • That said, the Truth Social post said Chinese “President Xi responded positively!”

The bottom line: We keep our USD 240 fair value estimate for wide-moat Nvidia. Shares rose 2% after hours on the news and still look undervalued. We think the recent selloff in AI names has presented investors with a buying opportunity.

  • We retain our Very High Morningstar Uncertainty Rating for Nvidia. Geopolitics like US-China relations are just one of many moving pieces for Nvidia’s future revenue and earnings growth.
  • Another risk has been the strong performance of Google’s Gemini AI model, based on its in-house TPUs. We’ve long expected custom ASICs like TPUs to carve out a piece of the AI market, but we’re not yet convinced that TPUs will widely encroach on Nvidia’s market dominance.

Coming up: Our model doesn’t yet reflect H200 revenue as we await details as to Chinese demand and the timing of license approvals and tax payments.

  • A significant inflow of H200 revenue would likely boost our fair value, although Nvidia’s supply chain would need to expand even faster to serve not only the revival of H200s but also Blackwell products.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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