Nvidia's Sovereign AI Push with Palantir Offers Counterweight as China Export Stalemate Persists

Nvidia partners with Palantir on government-grade AI infrastructure, targeting sovereign systems as China chip exports remain blocked and revenue from the region drops to zero.

Nvidia shares have shed roughly 7% over the past week, sliding to around €170 as a geopolitical standoff over advanced chip exports to China continues to block a once-lucrative revenue stream. Yet behind the headlines of a market lost, the company is quietly laying the groundwork for a new earnings driver: government-grade artificial intelligence infrastructure built on sovereign soil, far from the reach of Washington-Beijing tensions.

The latest piece of that strategy came into focus with a strategic alliance between Nvidia and Palantir Technologies. The two companies are working on a "Sovereign AI Operating System Reference Architecture" that marries Nvidia's forthcoming Vera Rubin platform and Blackwell Ultra GPUs with Palantir's AIP and Foundry software. The goal is to enable government agencies and operators of critical infrastructure to run advanced AI models locally, without routing sensitive data through commercial clouds. Vera Rubin was unveiled at the ISC High Performance conference in Hamburg; a fully configured rack system is said to deliver over seven exaflops of AI compute, with memory bandwidth 2.8 times that of the previous Blackwell generation. Nvidia's own open-source Nemotron models will also be available in these environments.

The timing is no coincidence. At the same time that Nvidia is deepening its ties with security-conscious governments, its China business has ground to a halt. Late last year, the US government green-lit exports of the advanced H200 chip to roughly ten Chinese companies, on the condition that it collect a quarter of the sales proceeds. On paper it looked like a breakthrough. In practice, not a single shipment has been delivered. Nvidia CEO Jensen Huang made that clear at the company's recent annual meeting, noting that the company has generated zero revenue from the arrangement and does not know whether imports will ultimately be permitted. Chinese firms have pulled back on orders following guidance from Beijing. US Commerce Secretary Howard Lutnick confirmed to the Senate that China's central government is blocking the purchases, steering investment instead toward domestic champions like Huawei.

Before the export clampdown, China accounted for about 13% of Nvidia's total revenue — roughly $17.1 billion — and the company commanded a 95% market share for advanced AI chips in the country. That share has effectively been reduced to zero. The standoff is compounded by a requirement that the H200 chips transit through US territory, a condition Beijing views as a potential vector for tampering. The Chinese State Council recently issued fresh supply-chain security rules that reinforce the homegrown push.

While that market remains locked, Nvidia is leaning hard into the concept of "Sovereign AI" — national-scale computing infrastructure built and operated by governments themselves. Europe unveiled 35 new Nvidia-powered supercomputers in June 2026 alone. These are not pilot projects but long-cycle procurement programs that are difficult to reverse. With limited alternatives to Nvidia's platform, governments become sticky customers. The geopolitical logic that closes doors in China is simultaneously opening them elsewhere.

The company is also expanding its physical footprint in emerging AI markets. The Nvidia-backed startup Firmus is building a 360-megawatt data center on the Indonesian island of Batam, designed to house 170,000 Nvidia accelerator cards and cover roughly $30 billion in off-take agreements over eight years. Meanwhile, NN, Inc. has secured multi-year contracts to supply stainless-steel liquid-cooling components for Nvidia's data-center racks — a deal that triples the size of its existing product line. Production is based in Wuxi, China, and is supplying the Asian supply chain including Taiwan and Vietnam, a sign that Nvidia's hardware ecosystem continues to hum even as its direct China sales stall.

At current levels near €168.94, the stock is testing its 100-day moving average of €168.78, while the 200-day line sits at €164. The relative strength index of 38.4 puts the shares close to oversold territory. Despite the 7.5% weekly drop, 95% of analysts still recommend buying the stock, with many viewing the Vera Rubin cycle as a multi-year demand catalyst. Palantir's shares have recovered more aggressively than Nvidia's of late, a signal that investors are increasingly valuing the software layer of the AI ecosystem.

The next major inflection point arrives on August 26, 2026, when Nvidia reports fiscal second-quarter earnings. The market will be looking for updates on Vera processor production ramps and commercial availability of the Rubin architecture in the second half of the year. Until then, the shares remain caught between two opposing forces: a China business that generates zero revenue and a sovereign AI pipeline that promises to fill the void, but not overnight.