US Approves Nvidia Chip Exports to 10 Chinese Companies; NVDA Up 4.4%, China Revenue Risk Lifted

In an unexpected geopolitical pivot, the Trump administration approved the export of advanced AI chips, including Nvidia's H200, to a select group of 10 Chinese companies, effectively lifting long-standing restrictions that had targeted semiconductor sales to China as a strategic lever in US-China relations. The move signals a significant shift from the prior administration's posture of maximum technology containment, and it immediately restored a major revenue stream for the semiconductor industry.

Nvidia's stock spiked 4.4 percent on the approval, reflecting investor relief that one of the most significant headwinds to the company's growth outlook had been removed. China has historically accounted for roughly 25 percent of Nvidia's total revenue, a position that had been severely constrained by export controls implemented over the past two years. The restoration of this market access materialized during Trump's summit with Xi Jinping in Beijing on May 14-15, suggesting the deal was part of broader trade and geopolitical negotiations. The optics are striking: the US is simultaneously pursuing tension in the Middle East (Iran), negotiating rare earth supply chains with China, and authorizing the sale of critical AI infrastructure to Chinese enterprises.

The market initially interpreted this as a significant positive for Nvidia and the broader semiconductor sector. However, the sentiment was quickly overwhelmed by the concurrent bond selloff and recession fears triggered by elevated oil prices and inflationThe rate at which prices rise across an economy. expectations. By the close, NVIDIA was down 2.2 percent for the day, AMD down 3.3 percent, and Broadcom also under pressure. The narrative shifted from "geopolitical win for Nvidia" to "another reason to question whether the AI capex cycle can sustain if growth slows."

Critics raised legitimate questions about whether the export approval was adequately screened for national security implications, and whether the move undermines broader US efforts to prevent technology leakage to China's military and intelligence apparatus. Additionally, some investors questioned whether China's willingness to pay for US chips at premium prices signals genuine demand for AI inference and training, or whether the approval merely restores a status quo ante without creating incremental upside. The long-term implications depend heavily on China's ability to monetize these chips in commercial applications and avoid regulatory clawbacks if US-China tensions escalate again.