Nvidia (NVDA) Stock: New AI Chip Plans for China as Morgan Stanley Boosts Price Target to $206

TLDR

Table of Contents

Nvidia reportedly developing new AI chip for China market more powerful than current H20 model
Morgan Stanley raises price target to $206 from $200, maintaining Overweight rating
CEO Jensen Huang sold 150,000 shares for $27.1 million through preset trading plan
Company agreed to pay 15% of Chinese AI chip sales revenue to U.S. government
Analyst raises Q3 revenue forecast to $46.6 billion, up from $45.2 billion estimate

Nvidia (NVDA) stock gained momentum Tuesday morning following reports of new product development and analyst upgrades. The chipmaker is reportedly working on a new artificial intelligence processor specifically designed for the Chinese market.

According to Reuters sources, the new chip would be more powerful than Nvidia’s current H20 model that’s approved for sale in China. The H20 was created to comply with U.S. export restrictions while still serving Chinese customers.

“We evaluate a variety of products for our roadmap, so that we can be prepared to compete to the extent that governments allow,” an Nvidia spokesperson told reporters. The company emphasized that all products receive full government approval and are designed for commercial use only.

Revenue Sharing Agreement in Place

The chip development comes as Nvidia operates under a new arrangement with the U.S. government. The company has agreed to pay 15% of revenue from AI chip sales in China to federal authorities.

This deal emerged after the Trump administration began approving licenses for processor exports to Chinese markets. The revenue-sharing structure allows Nvidia to access the lucrative Chinese market while addressing government concerns.

CEO Jensen Huang played a key role in negotiating this arrangement. The agreement represents a compromise between maintaining business relationships and satisfying regulatory requirements.

Morgan Stanley Raises Expectations

Investment bank Morgan Stanley boosted its price target for Nvidia shares to $206 from $200. The firm maintained its Overweight rating on the stock.

Analyst projections show growing confidence in Nvidia’s near-term performance. Morgan Stanley increased its July quarter revenue forecast to $46.6 billion, up from a previous estimate of $45.2 billion.

The October quarter outlook also improved. The firm now expects $52.5 billion in revenue compared to its prior $51.3 billion projection.

Morgan Stanley believes these numbers still represent conservative estimates. The firm noted that current projections reflect “undershipping end demand” and expect momentum to continue into next year.

If China fully returns to the market, it would add even more to current revenue projections. The analyst sees potential upside beyond their base case scenarios.

The price target increase reflects higher 2026 estimates. Morgan Stanley now projects revenue of $273.2 billion, up from $264.6 billion previously. Non-GAAP earnings per share estimates rose to $6.51 from $6.28.

CEO Stock Sale Through Trading Plan

Jensen Huang sold 150,000 shares for $27.1 million on August 14 and 15. The sales occurred at an average price of $180.80 per share through a preset Rule 10b5 trading plan.

These trading plans automatically execute transactions when preset parameters are met. They’re designed to prevent insiders from benefiting from nonpublic information.

Huang adopted this particular plan on March 20 to sell six million shares total. The recent sales represent progress through this predetermined schedule.

After the transactions, Huang owns 72.8 million shares in his personal account. He controls several hundred million additional shares through trusts and partnerships.

The stock sales don’t necessarily indicate the CEO’s view of company prospects. Trading plans execute automatically based on timing, price, and volume triggers set months in advance.

Nvidia shares rose 0.3% to $182.51 in premarket trading Tuesday. The stock gained 0.9% during Monday’s regular session and continues trading near recent highs ahead of earnings scheduled for August 27.

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