A Potential $54 Billion Catalyst for Nvidia’s China Business

Nvidia US67066G1040

While Nvidia continues to dominate the AI chip sector, investor sentiment has been weighed down by concerns over stringent U.S. export controls and potential Chinese countermeasures. A recent development, however, suggests a surprising shift may be underway, potentially reopening a critical revenue stream for the semiconductor giant.

According to a Bloomberg report, Chinese regulators have granted "initial" approval for the country's major technology firms to purchase Nvidia's advanced H200 AI processors. Industry heavyweights including Alibaba, Tencent, and ByteDance are reportedly preparing orders. Market analysts estimate the theoretical volume of these potential orders could reach up to 2 million units, representing a staggering value exceeding $54 billion.

This potential easing of restrictions is not unconditional. Reports indicate the companies must simultaneously commit to purchasing semiconductors from domestic Chinese producers. Although the import deals are not yet finalized, market observers view the permission to begin negotiations as a significant step. It could revitalize one of Nvidia's most crucial sales markets, which had been constrained by trade policies.

Strategic Positioning for the Next AI Phase

Concurrent with these developments in China, Nvidia is advancing its strategic technological focus. The company participated as a lead investor in a funding round for the startup Baseten, committing $150 million. This move highlights Nvidia's intensified focus on "inference"—the deployment and operational use of AI models in real-world applications, as opposed to solely training them.

Industry forecasts suggest this inference segment could account for approximately 66 percent of total AI computing demand by the end of 2026. By investing in Baseten, a platform that utilizes Nvidia's graphics processors, the chipmaker is securing a pivotal role in this next evolutionary phase of the AI boom.

Analyst Sentiment and Corporate Developments

The overall market outlook for Nvidia remains largely positive, even as competitors like Intel face pressure following disappointing forecasts. Analysts at JPMorgan have reaffirmed their "Overweight" rating on the stock. Jefferies recently raised its price target to $275 per share.

This optimism is further bolstered by reports of a massive order backlog, estimated at around $500 billion, extending through the end of 2026.

On the corporate governance front, board member Persis Drell has resigned from her position. Nvidia emphasized that the departure was for professional reasons alone and was not related to any internal disagreements.

Shares closed the week at $185.47. Despite a period of slight consolidation over the past month, the stock price remains in relative proximity to its 52-week high.

Investor Focus Turns to Execution

The investment community is now focused on the concrete implementation of the potential Chinese orders. Attention is also turning to the company's quarterly earnings, scheduled for release on February 25, 2026. Confirmation of eased restrictions in China, coupled with sustained demand growth in the AI inference sector, could powerfully reinforce the company's fundamental growth narrative.

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