Wall Street gave Nvidia’s stock a muted reaction on Tuesday, even though the company just secured a green light from the U.S. government to sell its second‑tier H200 GPUs to “approved” customers in China. The policy shift, announced after the Monday close, allows the chips to be exported in exchange for a 25 % royalty to the U.S. Treasury. President Donald Trump confirmed the move on social media, noting that Chinese President Xi Jinping had responded positively.
The H200 is not Nvidia’s flagship product—its top‑of‑the‑line offering remains the Blackwell‑based GPU slated for release later in 2026—but it is a substantial upgrade over the throttled H20 series that was forced on the Chinese market under previous export bans. The H20 chips were a stripped‑down version of the Hopper architecture, deliberately limited in performance to comply with U.S. restrictions that previously barred the export of H100 and H200 units.
In August, Nvidia struck a deal with the U.S. administration to ship 15 % of its H20 inventory to China in return for export licenses. The market response was tepid; demand for the H20 never materialized, and the company’s guidance explicitly assumed zero revenue from Chinese sales. By contrast, the newly approved H200 chips could enable Chinese data centers to run workloads that were previously unattainable, narrowing the performance gap with U.S. installations.
From a technology roadmap perspective, the H200 sits at the tail end of the Hopper generation, while Nvidia is preparing to mass‑produce its next‑generation Rubin architecture in the second half of 2026. The critical question for investors is whether Chinese enterprises—and the government that regulates them—will adopt the H200 in sufficient volumes to offset the lost H20 opportunity.
Market commentator Jim Cramer argues that adoption is likely. “China’s AI ecosystem is desperate for the compute power that Nvidia provides,” he said on Tuesday’s Morning Meeting. “If they don’t adopt these chips, they risk being shut out of the global AI race.” Cramer also dismissed a Financial Times report suggesting that Beijing would deliberately block Nvidia to protect its domestic chipmakers, calling the narrative “misleading.” While Beijing continues to nurture home‑grown silicon, the strategic calculus favors a hybrid approach: allowing limited H200 usage to accelerate AI development while still investing in indigenous designs.
Strategically, the move places China in a classic “catch‑22.” Limiting H200 deployment could spur domestic innovation but would also constrain the nation’s ability to train large language models (LLMs) at scale. The rapid adoption of AI models such as DeepSeek in early 2025 underscored how computational horsepower, rather than algorithmic novelty, drives commercial breakthroughs. Consequently, a pragmatic policy is likely to permit H200 use in research and high‑value applications, even as subsidies funnel into next‑generation Chinese GPUs.
From a valuation standpoint, analysts at Wells Fargo estimate that the export‑policy relaxation could add $25‑$30 billion of incremental revenue to Nvidia’s pipeline, translating into a $0.60‑$0.70 boost to earnings per share (EPS). Using the LSEG consensus for fiscal year 2027 (calendar year 2026), the expected EPS of $7.62 implies a forward price‑to‑earnings (P/E) multiple of roughly 24×. That multiple is at the low end of Nvidia’s historical range and represents a discount relative to the broader S&P 500, which trades at about 22× forward earnings with a 13.7 % compound annual growth rate (CAGR) versus Nvidia’s projected 31 % CAGR over the next three years. The resulting price‑earnings‑to‑growth (PEG) ratio for Nvidia falls below 1.0, a threshold often regarded as “highly attractive” by value investors.
Even absent any upside from Chinese sales, Nvidia’s growth trajectory remains solid, driven by expanding AI workloads across cloud, enterprise, and automotive sectors. Should Chinese customers adopt the H200 in meaningful quantities, analysts suggest earnings estimates could be revised upward, further compressing the valuation gap.
Bottom line: The clearance to ship H200 GPUs to China adds a new layer of upside to Nvidia’s already robust fundamentals. While geopolitical risk remains—a factor that could prompt Beijing to prioritize domestic chip development—the immediate financial impact is likely positive. Investors should weigh the modest near‑term stock dip against the longer‑term earnings potential embedded in the expanded China market and Nvidia’s broader AI platform leadership.
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