Nvidia Scored an H200 Win in China, But These Analysts Warn It May Not Be a Reason to Buy NVDA Stock

Nvidia Corporation (NVDA) has been one of the biggest success stories of the artificial intelligence (AI) boom, delivering spectacular gains and leaving investors constantly searching for the next NVDA. But Nvidia itself still has plenty of room to grow, with its graphics processing units (GPUs) remaining in huge demand as companies race to build AI-powered data centers. One of the biggest hurdles in that growth story, however, is China.

China is a large and important market for Nvidia. The country once contributed more than 20% of Nvidia's data center revenue, but escalating U.S. export restrictions, combined with China's push to build domestic technology, have caused Nvidia to lose much of its advanced AI chip market share there and cost the company billions in revenue. And now, the chipmaker appears to be getting a small opening back into China, but it may be too early for investors to celebrate.

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Chinese tech giants ByteDance and Tencent (TCEHY) have reportedly begun receiving Nvidia's H200 AI chips, giving Nvidia a much-needed foothold in a market where its more powerful chips remain restricted. Still, Wedbush analyst Matt Bryson believes the development will provide only a "minimal" boost to Nvidia's China revenue for the foreseeable future. Beijing wants most of the H200 chips to remain outside mainland China, and every purchase still requires case-by-case approval from regulators.

While companies can use the chips in Hong Kong, limited data center capacity and power constraints could make large-scale deployment challenging. Nvidia also has around 500,000 H200 chips in stock, largely intended for Chinese customers, but selling those chips at scale remains difficult. In other words, Nvidia may have found a way back into China, but it's a small door rather than a wide-open market. With that in mind, let's take a closer look at NVDA stock.

Over the past five years, few companies have been as synonymous with the AI boom as Nvidia. As AI evolved from an emerging technology into one of the biggest investment themes in the world, demand for the computing power needed to run it exploded, and Nvidia was perfectly positioned to capitalize. Today, its GPUs power everything from ChatGPT and cloud-based AI platforms to autonomous vehicles, robotics, and advanced scientific research, putting the company at the heart of the massive global spending spree on AI infrastructure.