NVDA Stock Slides as Nvidia Faces a $5.5 Billion Hit Due to Trump’s New Export Rule on Nvidia H20 Chips

Tech giant Nvidia disclosed in an SEC filing yesterday that future sales of its H20 AI accelerators to China would require a license from the U.S Department of Commerce. The licenses are not likely to be forthcoming, and as a result, Nvidia expects $5.5 Billion in charges. The news sent the NVDA stock spiraling, along with the shares of its key suppliers. 

The first quarter results will include these charges for the Nvidia H20 inventory and canceled sales. The Trump administration informed Nvidia last week that the Nvidia H20 will require an export license to ship to China. If the restrictions continue, Nvidia could lose more than $10 Billion in sales this year, not to mention the effect it would have on its stock. 

How is the NVDA Stock Faring After Trump’s Tariffs?

The NVDA stock fell 6.3% yesterday in extended trade. This is after the NVDA stock rebounded from an 11-month low last week. As the world’s leading AI chip manufacturer, it is under the spotlight as the US reconsiders its trade stance with China. Following Trump’s latest tariff threats, the NVDA stock has shown volatility as investors assess the long-term risk to its supply chain and exports to China. 

While Nvidia’s core business is not very reliant on Chinese consumer demand, US-China tension could disrupt its supply chain and manufacturing pipeline and limit sales to Chinese AI startups. This will evidently affect the NVDA stock, and the stock’s future moves depend on the severity of the tariffs and the scope of export restrictions. 

The NVDA stock is one of Wall Street’s most watched stocks, and powered by the current AI boom, it might face policy-driven swings soon. 

What is the Nvidia H20 Chip?

The Nvidia H20 is a less powerful version of Nvidia’s market-leading AI accelerators designed specifically for the Chinese market. It is very powerful but slower than the H100 Hooper chip used in the US and a step down from Nvidia’s new Blackwell chips. These chips can work together over high-speed connections.

In 2022, the Biden administration banned sales of full-powered Nvidia hardware in China but allowed it to sell a version like the Nvidia H20 with limited capabilities. Now, even that is proscribed because of President Trump. If a Chinese company or government entity could put enough of them together, it may be able to build a supercomputer that might rival the largest in the world. The U.S. Department of Energy uses its supercomputers to simulate nuclear tests and war. So, one in China may pose a national security threat, which is why the U.S. government has imposed restrictions. 

In the fiscal year 2025, 13% of Nvidia’s sales were from billing addresses in China, down from 26% in the fiscal year 2022, before the U.S. federal government began to take an interest in Nvidia’s Chinese customers. The Institute for Progress, a nonpartisan think tank in D.C, argued for restricting Nvidia H20 chips, as Chinese firms are likely to build such systems already. 

Conclusion

The Nvidia H20’s performance is low, below already available Chinese alternatives, and trade analysts argue that a ban simply hands over the Chinese AI market to Huawei. China’s H20 sales are not trivial but also not important in the grand scheme of things. Creating unnecessary red tape for export licenses while not explicitly stopping the export of Nvidia H20 chips means this is less a matter of national security and more about winning the AI arms race.

About the Author: Sarah Zimmerman is a seasoned crypto and Web3 news writer passionate about uncovering the latest developments in the digital asset space. With years of hands-on experience covering blockchain innovations, cryptocurrency trends, and decentralized technologies, she strives to deliver insightful and balanced news that empowers her readers. Her work is dedicated to demystifying complex topics and keeping you informed about the ever-evolving world of technology.