Nvidia (NVDA) Stock: Can Nvidia's New Strategy Overcome the China Setback?

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Nvidia stock edged lower by 0.3% to $135.22 in premarket trading on Tuesday
CEO Jensen Huang announced opening Nvidia’s AI server platform to rival chip makers
US government restrictions on H20 chip sales to China could cost Nvidia $15 billion in revenue
Citi maintained a Buy rating on Nvidia with a $150 price target
Nvidia plans to begin shipping GB300 chips in the third quarter of 2025

Nvidia (NVDA) stock slipped slightly in premarket trading Tuesday as investors processed several key developments that could impact the chip giant’s future earnings. The world’s second-largest company by market cap saw its shares dip 0.3% to $135.22, while S&P 500 futures were also down 0.3%.

CEO Jensen Huang made a major announcement on Monday that the company would open its artificial-intelligence server platform to rival chip makers. This move could create a new revenue stream for Nvidia.

“By making its proprietary interconnect technology available to a much larger set of architectures and use-cases, Nvidia is likely cementing itself further inside of AI racks,” noted William Blair analyst Sebastien Neji.

THIS IS MASSIVE$NVDA UNVEILS NVLINK FUSION, LETTING NON-NVIDIA CHIPS LIKE $GOOG TPUs, $AMZN TRAINIUM, $MSFT MAIA & $META MTIA TO INTEGRATE INTO DATA CENTER STACKS 😳pic.twitter.com/xQ5Q9xeGEp
— Shay Boloor (@StockSavvyShay) May 19, 2025

Neji maintains an Outperform rating on Nvidia stock.

Export Restrictions Impact

While Nvidia expands in one area, it faces challenges in another. US government restrictions on sales of the company’s H20 chip to Chinese customers are expected to have substantial financial consequences.

Huang revealed that these restrictions would reduce revenue by $15 billion. This figure exceeds previous estimates of $10 billion projected by Jefferies analysts.

Despite these headwinds, Citi analyst Atif Malik reaffirmed a Buy rating on Nvidia stock on Tuesday. He maintained a $150 price target following Huang’s keynote speech at Computex in Taipei.

Malik highlighted three key announcements from the event: the unveiling of NVLink Fusion, new advancements in physical AI with the Isaac GR00T N1.5 foundation model, and the introduction of enterprise-grade RTX PRO 6000 Blackwell servers.

These developments are viewed as strategic moves to expand Nvidia’s Total Addressable Market. The company aims to establish itself in emerging markets like Physical AI while securing a larger share in the growing AI infrastructure sector.

Product Rollout Timeline

Nvidia also confirmed that its GB300 chips would begin shipping in the third quarter. This timeline aligns with Citi’s projections.

Citi models suggest approximately 1 million GB300 units or around 15,000 GB300 NVL servers will be integrated into the market in calendar year 2025. These forecasts match the firm’s research within Asia.

The company is making international moves as well. Nvidia has partnered with Foxconn and the Taiwan government to build a new supercomputer.

Despite facing revenue challenges from export restrictions, many analysts remain optimistic about Nvidia’s prospects for the latter half of the year.

Morgan Stanley reiterated its Overweight rating on Nvidia stock. The firm highlighted the introduction of NVLink Fusion and RTX PRO servers as important developments.

BofA Securities maintained a Buy rating, pointing to Nvidia’s expanding AI product portfolio and potential benefits from recent Middle East deals.

Not all analysts share this bullish outlook. Raymond James reaffirmed an Underperform rating, citing potential challenges from the H20 export restriction and its impact on revenue growth.

Nvidia’s focus on expanding its enterprise solutions and maintaining strong gross margins continues to attract investor interest despite the recent stock dip.

The company’s cash position remains strong, putting it in a good position to execute its strategic initiatives in the AI and data center markets through 2025.

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