US Approves H200 Chip Exports to 10 Chinese Companies, NVDA Gains $1T Market Cap

In a stunning reversal, the Trump administration approved the sale of Nvidia's most advanced H200 AI chips to 10 Chinese companies, effectively lifting export restrictions that had been a drag on semiconductor valuations for two years. This decision came on the heels of Trump's two-day summit with Xi Jinping in Beijing, where geopolitical tensions appeared to ease in favor of trade pragmatism. The market reaction was swift: NVDA climbed 4.4 percent on the approval announcement and has rallied 20 percent since May 5, adding approximately USD $1 trillion in market capitalization and propelling Nvidia's valuation close to USD $5.7 trillion.

This move restores a critical revenue stream for Nvidia. China historically accounted for 25 percent of the chipmaker's total revenue, a plug that was pulled by Biden-era restrictions. Investors had priced in permanent loss of this market; the reversal now forces a repricing of Nvidia's addressable market, sustainable cash flows, and long-term AI infrastructure dominance. The announcement also raised questions about the scope and durability of the approval: will other restrictions follow, or is this a sign that US-China tech decoupling is reversing under Trump's transactional approach to trade?

The cross-sectoral impact is material for semiconductor supply chains and AI capex narratives. Taiwan Semiconductor Manufacturing Company (TSMC), a key Nvidia supplier, and other chipmakers now face a more favorable demand picture. However, the approval also undercuts the "decoupling" narrative that has driven defense contractor enthusiasm and reshoring narratives. Defense stocks tied to US-only technology leadership may face headwinds if Chinese competitors gain access to cutting-edge AI infrastructure at scale. Additionally, the move suggests that geopolitical tensions, while elevated (Iran war, North Korea), may not result in sustained US-China tech decoupling under Trump's mercantilist framework.

The bull case assumes China's AI capex accelerates, benefiting Nvidia and TSMC for years. The bear case hinges on regulatory uncertainty: Congress, particularly the Senate Armed Services Committee, may block or modify the approval, or secondary restrictions could emerge. Additionally, Nvidia's earnings expectations are now heavily dependent on China execution, adding geopolitical execution risk to the stock ahead of earnings next week.