US Approves H200 AI Chip Exports to China; NVDA Gains $1T Market Cap

In a striking reversal of export restrictions, the US has approved sales of Nvidia's most advanced H200 AI chips to a select group of Chinese companies, unexpectedly unblocking what was previously seen as strategic technology. The move came during President Trump's Beijing summit, signaling a recalibration of tech competition dynamics. Nvidia's China business was previously expected to account for roughly 25% of revenue; that channel is now partially reopened, reigniting bull sentiment in semiconductor and AI infrastructure names.

The approval sent NVDA higher by 4.4% on the day, bringing the stock to within striking distance of a $5.7 trillion valuation. CEO Jensen Huang has been publicly bullish on energy-intensive AI workloads, predicting a 1000x increase in compute demand as enterprises deploy AI 24/7. This geopolitical reprieve allows Nvidia to realize that thesis more fully and confirms the AI capex cycle is durable despite macro headwinds. The stock's 20% rally since May 5 has added roughly $1 trillion in market value in days, pushing earnings surpriseDifference between actual earnings and analyst consensus. risk higher.

The geopolitical context, however, remains contradictory. The US continues to support Israel in Middle East conflicts, negotiate with Xi on Taiwan, and maintain defense buildouts against China. Selling advanced chips to China while maintaining strategic competition is a delicate balancing act. Competitors like AMD and Broadcom will be watching closely to see whether they gain access to the same Chinese customers or remain restricted. Insiders at chip design firms like Arista are noting that AMD's competitive position in switch deployments is strengthening, potentially constraining Broadcom upside.

The longer-term risk is that this approval becomes a negotiating token in broader trade talks. Any deterioration in US-China relations or escalation over Taiwan could force a reversal, leaving China-dependent chip names vulnerable. Some traders are already debating whether the rally is sustainable or a classic 'sell the news' setup after the diplomatic announcement fades.