WARNING: If You Hold NVIDIA Stock (NVDA)… GET READY

Introduction

Holy moly! I wasn't gonna cover Nvidia until their next earnings call. But there's been so much huge news that this really can't wait. And after everything that happened, I'm convinced that Nvidia will be the world's first trillion company, even sooner than we think. Don't say I didn't warn you. Your time is valuable, so let's get right into it. First things first, I'm not here to waste your time. So here's the bottom line up front.

Table of Contents

1. Introduction to Nvidia's Growth
2. Trump Administration's Approval of AI Chip Sales to China
3. MetaPlatforms' AI Supercluster and Its Impact on Nvidia
4. OpenAI's Aura Browser and the Shift to GPU-Powered Search
5. Key Takeaways and Conclusion

The Trump administration just re-approved AI chip sales to China. MetaPlatforms is building an AI supercluster almost as big as Manhattan, and OpenAI is launching an AI web browser to compete directly with Google Chrome. And of course, I'll explain how all of this impacts Nvidia's bottom line and what it means for the stock. There's a ton to talk about. So let's start with the elephant in the room.

Up until a few days ago, the Trump administration had tight controls on exporting advanced AI chips to China, focusing on any chips supporting AI workloads in data centers. This included Nvidia's H20 chips, which were designed specifically to meet earlier versions of these export controls. Then, back in April, the government announced a new set of export restrictions that blocked selling these chips to China altogether, unless Nvidia had a license for every individual order.

These restrictions prevented Nvidia from shipping a huge portion of their most in-demand chips to Chinese companies, like Alibaba, Baidu, Tencent and ByteDance. China accounted for about 13% of Nvidia's revenue last year. But because of the ban, China couldn't fulfill these existing purchase orders or take on new ones. As a result, Nvidia lost around $2.5 billion of revenue in quarter one.

They wrote down another $5 billion in unsold inventory, and they removed China-related revenues from their profit forecasts, all of which I covered in my video on their most recent earnings call. Then earlier this week, the Trump administration announced that they would grant NVIDIA the licenses they need to resume sales to China.

Each shipment still requires a government license, and licenses will only be granted for the H20s and RTX Pro GPUs that were specifically designed to comply with these export controls, so not NVIDIA's highest performing chips. But even with these restrictions, there's a ton of pent-up demand from China's biggest tech companies and cloud service providers since Nvidia's hardware and software are much more powerful than what Chinese suppliers can provide.

As a result, analysts are estimating that around $8 billion in deferred or cancelled revenue will be recognized over the next few quarters, and total revenues from China could reach $15 to $20 billion by the end of this year. That's around 15% of Nvidia's total annual revenue. But this isn't just about today's revenues or profit margins.

The global artificial intelligence market is expected to more than 8x in size over the next eight years, which would be a compound annual growth rate of over 30% through 2033. And around 50% of all AI research happens in China. So the Trump administration‘s trade restrictions were locking the world's biggest AI infrastructure company out of the world's biggest AI market, which forces China to build their own solutions.

While that might delay their AI progress in the short term, it also forces China to innovate and build their own independent AI and semiconductor supply chains over the long term which makes them much more resilient So this isn just a huge catalyst for Nvidia but for the entire AI landscape since it brings more research and advanced computing into Nvidia ecosystem, adding more AI developers, solutions, and innovations over time.

Key Takeaways

Key Takeaways

Here are the key takeaways from this article:

• Nvidia's stock is expected to rise due to the Trump administration's approval of AI chip sales to China.
• MetaPlatforms‘ AI supercluster will rely heavily on Nvidia's AI infrastructure, driving up demand for their GPUs.
• OpenAI's Aura browser will shift search from CPUs to GPUs, increasing demand for Nvidia's GPUs.
• The global AI market is expected to grow significantly over the next few years, driving up demand for Nvidia's products.
• Nvidia's pricing power remains strong due to its dominant position in the data center GPU market.

Nvidia stock popped by around 6% this week so far.

But I think a lot of Wall Street analysts are still missing the bigger picture here – American AI chips re-entering the Chinese data center market, American companies spending tens of billions of dollars on city-sized super clusters, and AI browsers shifting search from CPUs to GPUs aren't one-off events. They're massive long-term tailwinds for Nvidia and honestly the rest of the AI market, which is why it's so important to understand the science behind the stocks and if you feel I've earned it, consider hitting the like button and subscribing to the channel.

That really helps me out and it lets me know to make more content like this. Either way, thanks for reading to the end, even though I gave you everything up front. Until next time, this is Ticker Symbol You. My name is Alex, reminding you that the best investment you can make is in you.