According to media reports, the Chinese government plans to approve the import of Nvidia’s H200 AI chips as early as this quarter. If this move materializes, it will mark Nvidia’s (NVDA) return to this important market. For investors, this could serve as a significant catalyst for the company.
The Chinese market holds considerable value for Nvidia. In the 2024 fiscal year, despite restrictions on high-end chip exports, Nvidia’s revenue in China still reached $17.1 billion. CEO Jensen Huang has stated that the demand for Nvidia chips in the Chinese market is “very strong” and suggested that if approved, its annual sales in China could exceed $50 billion. This figure may still be conservative.
Analysts generally expect Nvidia’s revenue to reach $320 billion next year. If an additional $40 billion in revenue is added and calculated based on the company’s current net profit margin of 56%, its earnings per share (EPS) could see significant growth. Estimating with the current price-to-earnings ratio of approximately 46 times, the stock price could potentially double from current levels. In short, returning to the Chinese market could deliver substantial additional returns for shareholders.
Over the past three years, the AI revolution has significantly driven demand for graphics processing units (GPUs). With its first-mover advantage, Nvidia’s stock price has surged by over 1000%, elevating its market capitalization to among the highest in the world. In the future, the company’s growth opportunities may extend beyond its current data center-centric focus. As AI workloads become increasingly complex, their application scenarios continue to expand. For example, AI-driven devices such as Tesla’s humanoid robots and Amazon’s manufacturing robots could reshape the labor market, while autonomous systems like self-driving cars have already adopted Nvidia chips for training. Additionally, AI is expected to play a key role in next-generation telecommunications services, such as the development of 6G. Nvidia’s investment in Nokia last fall demonstrates its strategic deployment of capital to explore potential markets.
Currently, Nvidia’s price-to-sales ratio (P/S) is approximately 25 times, near the low levels seen three years ago before its stock price began its significant rise. Although competition from companies like AMD and Broadcom is intensifying, and some investors may view Nvidia as a company with plateauing growth, the full arrival of the AI infrastructure era actually opens up broader growth opportunities for it. If its price-to-sales ratio returns to its historical high of around 40 times, the company’s implied market capitalization would significantly exceed current levels. Therefore, for patient long-term investors, Nvidia still presents considerable growth potential, and its stock price could have significant room for appreciation by 2030.
