Chinese tech giants like Alibaba (BABA), Tencent (TCEHY), and ByteDance have placed over $16 billion in orders for Nvidia’s (NVDA) H20 AI chips during the first quarter of 2025, according to The Information. The rush in demand comes amid concerns that the U.S. may soon ban the sale of these chips to China. While Nvidia has not commented, these orders could significantly boost revenue if the company manages to deliver the chips before any restrictions take effect.
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The H20 is currently allowed in China, but it’s less powerful than Nvidia’s Blackwell chips, which are banned due to national security concerns. To improve performance, Nvidia upgraded the H20 by pairing it with high-bandwidth memory (HBM) used in its Blackwell systems. As a result, many Chinese firms have ordered this improved version to keep up with the rising demand for AI tools like DeepSeek’s low-cost models. However, Nvidia faces production challenges, as it hasn’t booked enough chip-making capacity with Taiwan Semiconductor Manufacturing (TSM) to meet the spike in demand.
In addition, if the U.S. imposes a ban on these chips before the firm can deliver them, then Nvidia could be left with billions of dollars in unsold chips, especially since the H20 isn’t as appealing outside of China. Therefore, it may be forced to offer discounts or issue refunds. The risk is even higher for Nvidia due to its competition with Huawei, which CEO Jensen Huang recently called “the most formidable tech company in China.”
Is NVDA a Good Stock to Buy?
Turning to Wall Street, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the past three months. Furthermore, the average NVDA price target of $176.54 per share implies an upside potential of 59.2% from current levels.
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