Nvidia (NASDAQ: NVDA) has had a turbulent 2025, with its stock sliding over 30% and wiping more than $1 trillion from its market cap. While AI-driven sectors like data centers are booming, the chip giant faces an enormous threat tied to escalating U.S.-China trade tensions.
Up to 30% of Nvidia’s revenue could be at risk this year if the current export restrictions tighten further, presenting a serious concern for investors betting on a swift recovery.
The China Exposure Problem
Earlier this month, Nvidia disclosed that it might be forced to record a $5.5 billion charge related to its H20 chips earmarked for Chinese buyers. New U.S. regulations now require licenses to export certain AI chips to China, raising serious questions about future sales in the region. Officials cited risks that such chips could be diverted to Chinese supercomputers.
Last quarter, 14% of Nvidia’s sales were reported as stemming directly from China. However, that may not tell the full story.
Nvidia’s filings reveal that Singapore accounted for a larger 18% share of revenue. Yet management clarified that many of these shipments are only invoiced through Singapore, with the products ultimately destined for China. Analysts now estimate that China’s real contribution could be close to 30% of Nvidia’s total revenue.
Billions in Orders at Risk
Reports suggest that Chinese firms placed more than $16 billion in orders for Nvidia’s H20 chips in the first quarter of 2025 alone. With the new export license restrictions, these sales are hanging in the balance.
Complicating matters, local Chinese competitors like Huawei are ramping up their AI chip efforts, looking to fill any gaps left by a Nvidia pullback. The Chinese government, vocal about reducing dependence on foreign tech, is likely to accelerate efforts to support domestic alternatives.
Even if trade rules ease, Nvidia’s market share in China could suffer permanent damage — a harsh reality for a company trading at a historically high valuation.
The Bottom Line for Investors
While Nvidia’s core AI markets remain strong, its heavy exposure to China introduces a serious risk. The company’s valuation demands near-flawless execution, but the trade war and new chip restrictions threaten to significantly undercut its growth story.
Investors should keep a close eye on the evolving U.S.-China negotiations and Nvidia’s efforts to diversify sales outside Asia.
