How Should You Play NVDA Stock as Nvidia Agrees to China Chip Revenue Deal?

Nvidia (NVDA) remains in focus on Monday after the artificial intelligence (AI) behemoth said it has signed a landmark deal with the White House to resume its business in China.

President Donald Trump has agreed to issue an export license that will enable NVDA to continue selling chips in the world’s second-largest economy.

In exchange, the U.S. government will take 15% of the revenue from its H20 sales to China. At the time of writing, Nvidia stock is up some 110% versus its year-to-date low set in early April.

The aforementioned arrangement with the Trump administration is a positive for NVDA shares as it essentially restores access to a crucial revenue stream.

China generated over $17 billion for Nvidia, which makes it one of the company’s largest markets.

Resuming chip sales there, despite the revenue-sharing agreement with the U.S. government, stands to help the semiconductor giant maintain its global dominance in AI hardware.

Investors view this deal as a strategic win for Nvidia stock because it mitigates geopolitical risk, unlocks billions in potential sales, and reinforces the company’s foothold in a rapidly growing AI ecosystem.

According to a senior Wells Fargo analyst, Aaron Rakers, Nvidia shares could rally over 20% from here on the back of this agreement with the Trump administration.

“We would assume NVDA can recapture the full $8B/qtr revenue impact the H20 China ban was expected to have on the F2Q26 (July) qtr by F4Q26 (Jan),” he told clients in a research note today.

More importantly, Rakers sees China demand growing significantly from the current $8 billion run-rate moving forward.

On Monday, he reiterated his “Overweight” rating on NVDA stock and raised his price target to $220.

Note that other Wall Street firms are keeping bullish on Nvidia stock in the second half of 2025 as well.

The consensus rating on NVDA shares currently sits at “Strong Buy” with price targets going as high as $250, indicating potential upside of another 37% from current levels.