Nvidia faces mounting pressure as China advises state-owned enterprises to avoid its H20 chips, particularly for government-linked projects. This move strikes at the heart of Nvidia’s revenue strategy, which relies on Chinese sales to offset losses from U.S. trade restrictions. Simultaneously, a prominent hedge fund slashed its Nvidia holdings by 93%, citing profit-taking and valuation concerns amid the stock’s historic rally. While Nvidia’s shares showed surprising resilience—gaining 0.9% pre-market—analysts note the company’s reduced dependence on China, now accounting for just 8% of its S&P 500 dominance.
Broader Market Implications
Competitors like Broadcom are benefiting as investors seek diversified AI plays. Nvidia’s upcoming quarterly results on August 27 will test its ability to navigate these challenges. Despite China’s push for domestic alternatives, Nvidia’s global AI leadership and data center chip dominance offer a buffer, reflected in the market’s measured reaction.
