How High Can Nvidia Stock Go as Jensen Huang Heads to China?
Nvidia (NVDA) stock is back in the news, this time mostly for pleasant reasons. Last week, the company’s market capitalization reached $4 trillion as it surpassed Microsoft (MSFT) and Apple (AAPL) to achieve that milestone. It’s been a dream rally for NVDA.
What makes the feat even more impressive is that Nvidia achieved it despite losing billions of dollars in quarterly revenue in China, due to the U.S. tightening restrictions on exports of high-end artificial intelligence (AI) chips to the country.
Meanwhile, Nvidia CEO Jensen Huang is headed to China and is set to hold a media briefing on Wednesday, July 16. Huang met President Donald Trump ahead of his visit, which would be his second this year. A bipartisan letter from U.S. senators has meanwhile requested the Nvidia CEO to “refrain from meeting with representatives of any companies that are working with the PRC’s military or intelligence establishment, are named on the Entity List, or are suspected to have engaged in activities that undermine export controls.”
China was once Nvidia’s second-biggest market and during the fiscal Q1 2026 earnings call in May, CFO Collete Kress said, “Losing access to the China AI accelerator market, which we believe will grow to nearly $50 billion, would have a material adverse impact on our business going forward and benefit our foreign competitors in China and worldwide.”
Nvidia’s China business has come to a screeching halt, and at the GTC Paris Financial Analyst Q&A Event last month, Huang stressed that the company is assuming zero revenues from China AI chip sales currently and called upon the analyst community to also do so in their models. Huang alluded to chip export controls being a bargaining ploy in U.S.-China trade talks while terming any upside from that eventuality as a “bonus.”
Huang said that Chinese competitors are a few years behind Nvidia, and NVDA’s AI chips have nearly 5 times more efficiency than Huawei’s. He, however, said, China can capitalize on lower power prices compared to the U.S. and use more domestic chips and increase the number of data centers that it is building.
Huang has built a case for allowing AI chip exports to China and has reiterated multiple times that the export ban is not helping and, if anything, it is simply spurring innovation in China.
Meanwhile, the AI rally has gotten new legs from a hiring and acquisition spree in Silicon Valley. Meta Platforms (META), for instance, has taken a 49% stake in Scale AI and also acquired AI voice startup Play AI. Alphabet (GOOG) has also announced a $2.4 billion deal with coding startup Windsurf, which is more of a talent requirement drive and will see the startup’s CEO and other key executives join the company. Apple was also rumored to be considering acquiring AI startup Perplexity.
With hyperscalers showing no signs of slowing down their AI capex, Nvidia’s cash registers could keep ringing in the medium term. Notably, AI inference demand could increase significantly and should more than offset any slowdown in demand for training models. There are also early encouraging signs of AI monetization with OpenAI and Anthropic reaching annualized revenues of $10 billion and $3 billion, respectively. For context, Anthropic’s annualized revenues tripled in five months while the metric nearly doubled for OpenAI in six months.
Sovereign AI is yet another growth driver for Nvidia, as, given the growing importance of AI, major countries want to have more control over the technology. Huang has been globe-trotting for a reason and has been pitching sovereign AI on his trips to the Middle East and the European Union this year.
Another trigger for Nvidia could be a potential easing of China export restrictions, or the company coming up with a new chip that it can export under the current set of rules. While to quote Huang, that is a “bonus,” it would be a pretty fat one, and help add billions more to Nvidia’s burgeoning revenues and profits.
Loop Capital has a Street-high target of $250 on Nvidia, which implies upside of more than 50% from these levels. Incidentally, Nvidia’s market cap will rise above $6 trillion if it were to hit the $250 price level.
Nvidia’s growth engine is not expected to slow down anytime soon, and analysts are modelling a 53.2% year-over-year rise in revenues in the current fiscal year. While the revenues are expected to rise by a more grounded 25.7% in the next fiscal year, it is still higher than what analysts expect from other Magnificent 7 peers. Moreover, a resumption of China business could mean that Nvidia ends up generating a lot more revenue than the current estimates.
From a valuation perspective, Nvidia trades at a forward price-earnings (P/E) multiple of nearly 41x, which is the second highest among the Magnificent 7 peers after Tesla (TSLA). However, it has the second-lowest P/E-to-growth (PEG) multiple of 1.45x after Alphabet, whose PEG stands at 1.26x.
Nvidia’s valuations don’t seem exorbitant, even if they are not mouthwatering. I continue to believe that NVDA has the momentum with it, and any positive update on the China chip business could help drive the stock even higher. A $200 price level does not look too demanding for Nvidia if the company can manage to get concessions for chip exports to China.
On the date of publication, Mohit Oberoi had a position in: NVDA, TSLA, AAPL, MSFT, GOOG, META. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com