What Happened?
Shares of leading designer of graphics chips Nvidia (NASDAQ:NVDA) jumped 4.2% in the afternoon session after the company confirmed it will resume sales of its H20 AI chips to China after receiving assurances from the U.S. government that export licenses will be granted.
The news marks a significant reversal after sales were halted in April, a move that prompted Nvidia to take a $4.5 billion charge in the first quarter. The H20 chips, which are less powerful versions of Nvidia's more advanced processors, were specifically designed to comply with U.S. export restrictions for the Chinese market. The resumption of sales to China, a key market for the chipmaker, is expected to provide a significant revenue boost in the latter half of 2025. CEO Jensen Huang has been a vocal critic of the chip restrictions, stating they had cut the company's market share in China by nearly half. In addition to the H20 news, Nvidia also announced a new, fully compliant chip, the RTX PRO, aimed at powering smart factories and logistics. The positive developments sent shares soaring and lifted other chip-related stocks.
After the initial pop the shares cooled down to $170.73, up 4.1% from previous close.
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What Is The Market Telling Us
Nvidia’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Nvidia is up 23.4% since the beginning of the year, and at $170.73 per share, has set a new 52-week high. Investors who bought $1,000 worth of Nvidia’s shares 5 years ago would now be looking at an investment worth $16,693.
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