U.S. Administration Considers Easing Advanced Chip Exports to China

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A significant shift in U.S. semiconductor export policy is underway, with the current administration initiating a multi-agency review. This process could, for the first time, permit the sale of Nvidia's cutting-edge H200 artificial intelligence chips to the Chinese market. License applications have been forwarded by the Commerce Department to the Departments of State, Energy, and Defense for evaluation, with the final decision resting with the President.

This proposed strategy represents a stark departure from the restrictive measures of the previous administration. Officials argue that allowing Nvidia to sell its advanced H200 processors in China could diminish the incentive for domestic competitors, such as Huawei, to accelerate development of their own high-performance alternatives.

Key elements of the review include:
* A 30-day window for interagency commentary.
* A planned 25% levy on all H200 sales destined for China.
* Vocal criticism from China skeptics across the political spectrum.
* Industry reports suggesting Nvidia is considering production increases to meet substantial anticipated demand from Chinese buyers.

Simultaneously, a separate development is causing concern among policymakers. Reports indicate that Chinese tech giant Tencent may have gained access to restricted Blackwell chips through cloud partnerships with Japanese firm Datasection. The chips are reportedly housed in data centers located in Osaka and Sydney—a structure that circumvents ownership-based export controls. This loophole may prompt regulators to expand future restrictions to include cloud-based access.

Robust Operational Performance Amid Uncertainty

Despite the geopolitical complexities, Nvidia's underlying business fundamentals remain exceptionally strong. For the fourth quarter of fiscal year 2026, the company projects revenue of approximately $65 billion (±2%), with a GAAP gross margin forecast at 74.8% (±50 basis points).

The company has also demonstrated a substantial commitment to shareholder returns. In the first nine months of the current fiscal year, $37 billion was returned to investors through a combination of share repurchases and dividend payments. An additional $62.2 billion remains authorized under the ongoing buyback program.

Sustained Analyst Confidence

Market analysts maintain a predominantly bullish outlook. The consensus rating remains a "Strong Buy," with the average price target hovering near $252. Recent adjustments have been upward: Truist Securities raised its target to $275 on December 19, while Tigress Financial set a target of $350, labeling Nvidia the "preeminent AI investment."

Some market experts contend that, with a forward price-to-earnings ratio below 38, the current valuation fails to fully price in the potential of the global AI infrastructure build-out. In a complementary strategic move, Nvidia recently bolstered its high-performance computing portfolio by acquiring SchedMD, the developer behind the Slurm open-source workload manager. This software is integral to the operation of more than half of the world's top 10 and top 100 supercomputers.

Nvidia shares closed at $180.99 on Friday. The company is scheduled to report its fourth-quarter earnings on February 25, 2026. Until then, the evolving debate on export permissions is likely to be a primary driver of the stock's trajectory.