Nvidia’s China Connection?
Stock Slumps Despite Record AI Growth
Nvidia’s stock under pressure?
What’s going on?
Can Nvidia maintain its AI dominance, or will Chinese alternatives like Huawei and DeepSeek start closing the gap? 🚀 Keep reading to find out.
Nvidia’s FY2025 Earnings
In late February 2025, Nvidia (NASDAQ: NVDA) delivered another stunning earnings report, reaffirming its dominance in AI computing. Fueled by relentless demand for high-performance GPUs powering generative AI, the company posted staggering triple-digit growth across key financial metrics.
A Record-Breaking Quarter:
💰 Gross Profit: $97.9B (+115% YoY)
📊 GAAP EPS: $2.94 (+147% YoY)
The data center division—home to Nvidia’s flagship AI chips—stole the show, generating $115.2 billion in FY2025 and accounting for 88.3% of total revenue. The rapid growth of this segment is evident in the chart below.
The gaming industry was the second-largest revenue source, bringing in $11.4 billion, representing 8.7% of the total.
During the earnings call, CEO Jensen Huang described the surging demand for Nvidia’s latest Blackwell GPU systems as “nothing short of astounding.” The company remains at the heart of the AI revolution, shaping the future of computing infrastructure worldwide.
Stock Slumps Despite Record AI Growth
Despite yet another quarter of record-breaking performance, Nvidia’s stock has not been immune to broader market pressures. After hitting an all-time high of $149.43 on January 6—even briefly crossing the $150 mark—Nvidia’s shares have since tumbled.
📉 Stock Performance Over the Last Year
End of January Sell-Off: As we discussed in previous articles, the launch of China’s DeepSeek AI models triggered a $600 billion market wipeout for Nvidia, unsettling investors.
Early March Decline: While the stock rebounded to $140, it quickly faced another downturn, closing at $115.99 on March 4—a 23% drop, wiping $900 billion off Nvidia’s market cap.
The challenges are far from over. The Trump administration is considering tightening AI chip export controls, potentially restricting Nvidia’s H20 GPU, a model designed for the Chinese market. Stricter measures could prevent China from accessing Nvidia’s AI hardware via third-party countries, reinforcing policies first introduced under the Biden administration.
Geopolitical Risks & Nvidia’s China Connection
Nvidia is actively lobbying against these restrictions, warning that banning chip sales to over 150 countries could push allies toward Chinese alternatives like Huawei. Meanwhile, Beijing has hit back, launching an anti-monopoly investigation into Nvidia, widely seen as retaliation for U.S. sanctions on China’s semiconductor industry.
One of the most surprising developments in 2024 was that Singapore became Nvidia’s second-largest revenue source—fueling speculation that AI chips meant for China were being rerouted through third-party networks.
In January 2025, China’s DeepSeek gained global attention for its advanced AI model complexity and cost-efficiency, despite U.S. export bans.
Investigations revealed that DeepSeek’s AI was still trained on Nvidia GPUs, raising concerns about how these chips reached China.
Singapore authorities recently arrested three individuals for misreporting the final destination of U.S.-made servers, suspected of containing Nvidia chips.
Singapore’s Interior Minister K. Shanmugam revealed that Dell and Supermicro servers were rerouted through Malaysia—but was Malaysia really the final stop? This raises critical questions about the complexity of AI chip trade networks.
Despite Singapore’s denial of acting as a backdoor for AI chips, Nvidia itself acknowledged key revenue discrepancies in its annual report:
📌 Billing vs. Shipping Reality
Singapore accounted for 18% of Nvidia’s total revenue in the last fiscal year (~$24B).
But only 2% of shipments (~$473M) actually stayed in Singapore.
This suggests that most Nvidia chips "sold" to Singapore were immediately re-exported elsewhere.
What’s Next for Nvidia?
🔹 Tighter U.S. export controls could cut $4-5 billion from Nvidia’s expected revenue this fiscal year.
🔹 China’s AI demand remains strong, but new restrictions could accelerate the rise of domestic alternatives like Huawei and DeepSeek.
🔹 Nvidia remains a leader in AI innovation, with record demand for its Blackwell GPU architecture, but investors must weigh its regulatory risks alongside its growth potential.
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Created by Arya
Nice breakdown. The main sorry for me with NVDA is I think it’ll be fairly impossible to maintain 70% margins. Combine that with inevitable slowing of growth and you’ve got a stock where perhaps the big money has already been made.
Nice PEG though.