Nvidia Stock Gains Pre-Market, as Chinese H200 Shipments to Begin in February

Nvidia's stock is experiencing upward momentum, driven by the company's plans to commence shipments of its H200 AI chips to China before the Lunar New Year in mid-February. This development follows the U.S. government's approval for exporting the H200 chips and signals a potentially significant revenue stream for the semiconductor giant.

The market reacted positively to the news, with Nvidia's stock rising 1.7% in pre-market trading to sit at $184.08.  The initial shipments will draw from existing inventory, encompassing roughly 5,000 to 10,000 modules, which translates to 40,000 to 80,000 H200 chips. These are intended to fulfill orders from existing customers, with Nvidia anticipating opening orders for new production capacity in the second quarter of 2026.

U.S. Policy and Market Impact

The U.S. government's decision to allow H200 chip exports to China marks a shift in policy, with a stipulation that 25% of the revenue from these sales will be remitted to the U.S. government. While the H200 is not Nvidia's most advanced AI chip, it represents a substantial upgrade over previous models available to Chinese customers. This approval reflects arguments that selling advanced chips to China could strengthen U.S. leadership in artificial intelligence, though conditions have been added.

Investor optimism has been fueled by the potential for increased revenue and expanded market access in China. Following the initial announcement of the U.S. approval on December 8, Nvidia's shares climbed approximately 2% in after-hours trading.

However, the path forward is not without potential obstacles. The Chinese government is reportedly considering restrictions on the use of imported AI chips, potentially limiting their application to situations where domestic options are inadequate or even banning them from use in the public sector.

Such regulatory measures could dampen Nvidia's prospects in the Chinese market. Moreover, Nvidia faces growing competition from domestic Chinese companies like Huawei, Cambricon, Moore Threads, and MetaX, all of which are developing their own AI chips. Despite this competitive pressure, analysts suggest that Chinese AI developers will likely welcome Nvidia's H200 chips, citing their superior performance compared to homegrown solutions.

While regulatory uncertainties and increasing competition present challenges, the market's initial positive reaction indicates confidence in Nvidia's ability to capitalize on the demand for AI hardware in China.