May 18, 2026
President Donald Trump confirmed Friday what Nvidia (NASDAQ:NVDA) investors have been quietly worrying about for months. Speaking to reporters aboard Air Force One after a two-day summit with Chinese President Xi Jinping, Trump said Beijing has refused to approve purchases of Nvidia's H200 AI chips, and the reason is straightforward (1).
"They have a much higher level than H200. China needs it and yeah it came up," Trump said. "They choose not to buy because they want to develop their own. I think something could happen on that" (1).
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Nvidia stock fell 4.4% Friday, giving back the all-time high it had touched a day earlier on news that the U.S. Commerce Department had approved the sale (1). For investors trying to read where Nvidia's China revenue is heading, this week was supposed to be a turning point. Instead, it looked like confirmation that the turning point already passed.
What actually happened
Earlier in the week, Reuters reported that the Commerce Department had cleared roughly 10 Chinese firms — including Alibaba, Tencent, ByteDance and JD.com — to purchase up to 75,000 H200 chips each through approved distributors like Lenovo and Foxconn (2). At current pricing, that ceiling caps initial sales at roughly $15-$20 billion in revenue (3). KeyBanc analyst John Vinh has modeled total Chinese demand at around 1.5 million units annually, or about $30 billion in revenue, if the licensing framework expands (3).
Nvidia CEO Jensen Huang was added to the White House delegation at the last minute, joining Trump in Alaska en route to Beijing in what was widely read as an attempt to push a deal across the line (1).
It did not work. As of Friday, not a single H200 had shipped to a Chinese buyer, and Beijing had quietly steered domestic firms away from following through on the orders they placed earlier in the year (1).
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Why this is a bigger problem than it looks
Several pieces of evidence suggest China has made a strategic decision rather than a tactical pause.
Commerce Secretary Howard Lutnick told a Senate hearing last month that Chinese firms are "trying to keep their investment focused on their own domestic" suppliers including Huawei (4).
DeepSeek, one of China's leading AI labs, launched its V4 model on April 24 optimized for Huawei's Ascend chips rather than Nvidia hardware (5). ByteDance has lifted its 2026 AI capex to roughly $30 billion, with a larger share now flowing to domestic chipmakers (6). Huawei's flagship Ascend 950PR has seen prices rise roughly 20% on demand strength following the DeepSeek launch (7).
The fee is structurally tied to a routing requirement. U.S. law does not permit direct export fees, so chips have to physically pass through U.S. territory before re-export to China — a workaround that lets the Treasury collect 25% of every sale (10).
Beijing's objection is reportedly less the fee than the routing itself: Reuters reported the arrangement has prompted unease in China over potential tampering or hidden vulnerabilities, and the State Council recently issued two supply-chain security regulations aimed at eliminating foreign-tech dependencies in critical infrastructure (10). Removing the fee would likely require restructuring the framework, not just dropping a tax line — which makes the path to "yes" narrower than it looks.
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Huang has acknowledged that Nvidia's official market share in China is now zero, down from roughly 95% before U.S. export curbs took hold (8). In its most recent 10-K, Nvidia said it is "effectively foreclosed from competing in China's data center computing market" and assumes no data center compute revenue from the region in current guidance (7).
The bear case has a counterweight, though. Huang said in January that Chinese demand for the H200 was "very high," with orders exceeding two million units before Beijing's pause (9). And Wall Street is still bullish on the broader thesis — Cantor Fitzgerald sits at a $350 price target, Bank of America at $320, UBS at $275 and Melius Research at $380 (3). The China story is one variable in a stock that has continued to rally on hyperscaler capex and sovereign AI deals elsewhere.
What investors should watch on May 20
Nvidia reports fiscal Q1 2027 results after the close on Wednesday, May 20 (3). Wall Street expects revenue near $78 billion, up roughly 78% year over year (3). Two things are worth watching beyond the headline number.
First, how management characterizes the China opportunity in forward guidance. Nvidia's official line has been that guidance assumes zero China revenue — if that changes, the bull case strengthens. If it doesn't, investors should treat China as a call option rather than a base case.
Second, whether the company addresses Huawei Ascend as a competitive threat. Huang has been reluctant to do so publicly, but the DeepSeek V4 launch and Huawei's projected $12 billion in AI chip revenue this year make the question harder to sidestep (7).
The longer arc points to Nvidia's Vera Rubin platform, scheduled for mass production later this year (9). For now, Nvidia's thesis rests on hyperscaler capex, sovereign AI deals and enterprise demand carrying the full weight of growth.
That has worked so far. The question is how long it can carry the stock without China.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Bloomberg (1); CNBC (2); Top1 Markets (3); Implicator (4); Fortune (5); South China Morning Post (6); Tom's Hardware (7); Yahoo Finance (8); Blockonomi (9); Reuters (10)
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Rudro is an Editor with Moneywise. His work has appeared on Yahoo Finance, MSN, MSN Money, Apple News, Samsung News and the San Diego Union Tribune.
