TLDR
- Nvidia stock hit a record high on reports of placing orders for 300,000 H20 AI chips for China after trade restrictions were lifted
- The Trump administration reversed the April ban on H20 chip sales to China, allowing Nvidia to resume business in the market
- Nvidia already has a stockpile of 600,000 to 700,000 H20 chips and sold around 1 million units in 2024
- Microsoft and Meta earnings reports on Wednesday could serve as the next catalyst for Nvidia stock movement
- Chip startup Groq is reportedly raising $600 million at a $6 billion valuation, adding to AI chip competition
Nvidia shares reached their third consecutive record high on Tuesday following news of major chip orders for the Chinese market. The stock hit an intraday peak of $179.38 before closing down 0.7% at $175.51.
Reuters reported that Nvidia placed an order for 300,000 H20 chipsets with Taiwan Semiconductor Manufacturing. This new order demonstrates the company’s confidence in Chinese market demand beyond its existing inventory.
The chipmaker currently holds between 600,000 and 700,000 H20 chips in stock. The additional order suggests strong expected sales in the region.
The Trump administration lifted restrictions on H20 chip sales to China earlier this month. This reversal came after an April ban that blocked AI chip exports due to national security concerns.
Nvidia designed the H20 specifically for Chinese customers to comply with previous export restrictions. The chip is a modified version of the company’s Hopper series H100 processor with reduced capabilities.
Sales data shows Nvidia moved approximately 1 million H20 chips in 2024 according to research firm SemiAnalysis. This volume indicates substantial market demand despite the restricted specifications.
Export License Requirements
The company still needs U.S. government export licenses to ship the H20 chips to China. However, reports suggest these approvals are expected soon.
Wedbush Securities analyst Matt Bryson noted the positive implications if the news proves accurate. He maintains an outperform rating with a $175 price target.
The analyst also highlighted potential benefits for other server supply chain components. These include CPUs, storage, memory, and cooling systems needed for AI infrastructure buildouts.
Tech Earnings as Next Catalyst
Wednesday brought fresh focus as Nvidia shares rose 0.5% to $176.45 in premarket trading. Investors are now looking toward major customer earnings reports.
Microsoft and Meta Platforms report results Wednesday afternoon. Both companies represent major customers for Nvidia’s AI chips.
Market watchers will examine AI infrastructure spending trends in these reports. They also want to see if tech companies plan to develop in-house chips rather than buying Nvidia hardware.
Competition continues to emerge in the AI chip space. Startup Groq is reportedly raising $600 million at a $6 billion valuation according to Bloomberg sources.
Groq specializes in high-speed inference chips for AI model output generation. The company has signed deals with Saudi Arabia’s Humain, which also purchases Nvidia chips.
Other chip stocks showed mixed premarket movement Wednesday. Advanced Micro Devices fell 0.4% while Broadcom dropped 0.2%.
The H20 chip orders represent a return to the Chinese market after months of restrictions. Nvidia had been blocked from selling advanced AI chips to Chinese customers since April.
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