Nvidia Doesn't Need China | GeneMunster.com

Gene Munster, Brian BakerMay 15, 2026

Nvidia Doesn’t Need China

The U.S. approval for Nvidia to sell H200 GPUs into China creates a call option for an incremental 3-5% of revenue in CY26 and CY27. At the high end, I believe China could add 10% to CY27 estimates. I caution that, even though China can drive some upside, the unpredictable nature of future China revenue likely means NVDA won't get credit for that upside. In the end, Nvidia doesn't need China because growth has accelerated without China. In the April quarter that will be reported this Wednesday, May 20, the Street is expecting revenue growth of 79%. Removing the China revenue from April of last year to get an apples-to-apples growth rate, sales are expected to be up 100% y/y, up from 89% growth reported in the recent January quarter, adjusting for China.

Key Takeaways

H200 approval gives Nvidia a path to 1-2% revenue upside in CY26 and 3-5% in CY27, but I caution there is a light-year gap between “approval” and actual sales.

Nvidia’s non-China revenue is accelerating, suggesting the Nvidia growth story doesn't need China.

Nvidia investors are facing a trillion-dollar wall of worry. At the March GTC event, Jensen set a floor of $1T in cumulative data center revenue through 2027, which suggests revenue growth next year of 40%-plus, vs. the Street at 32%.

H200 Approval Puts China Back in the CY27 Conversation

This week, Nvidia received approval to sell H200s to roughly 10 Chinese firms, with Alibaba, Tencent, and ByteDance confirmed and the rest unnamed. That’s a positive structural development because it provides a new response to the CY27 growth-wall concern that has weighed on the multiple.

This does not change the May 20 print given the update fell into the July quarter. I believe their July guide will not include revenue from China given it’s so unpredictable, but I expect the company to suggest it could add between 1-2% to sales in the July quarter.

The issue here is that approval does not equate to revenue. For the past several months, Nvidia’s H20 has been approved in China, yet the Chinese government has told companies not to purchase them and to favor domestic Chinese GPUs. Given Jensen’s recent visit to China alongside President Trump, there is a greater probability that approval does turn into sales in the near term. That said, investors will put little faith in China revenue being sustainable given the delicate ground the U.S.-China relationship stands on.

Nvidia’s Business Without China Is Still Accelerating

I believe the market is too focused on what China could become and not focused enough on what Nvidia is accomplishing outside of China.

Last year, Jensen put the AI GPU TAM at $50B, which means it’s likely at $75B this year. If Nvidia captured 80% share in China, which is highly unlikely, then Nvidia could generate $60B in China revenue this year. It’s more likely that the best case is Nvidia captures 30% share in China, which would land around $23B. Looking at the Street’s CY26 estimates of $370B suggests the best case is China could add 6% to overall sales over the next four quarters.

What’s more important is that Nvidia’s business excluding China is accelerating. Going back and subtracting China revenue out of the January and April quarters of 2025 reveals that the non-China business grew at 89% in the January ’26 quarter and is estimated to grow at 100% in April of 2026. In the end, the actual April results will likely land closer to 110% y/y growth.

The Trillion-Dollar Wall of Worry

At the GTC keynote on March 16, Jensen updated the outlook through CY27. Huang projected that the company would see at least $1T in cumulative data center revenue through 2027. This is driven primarily by Blackwell and Vera Rubin and, to a lesser extent, networking systems. Importantly, Jensen said that demand could push the final figure even higher.

While I was impressed by the update, NVDA’s share reaction was muted, which underscored that the NVDA growth concern that started six months ago, with shares up 8% vs. Nasdaq up 12%, is not going away. My sense is investors don’t believe the company can sustain a growth number in CY27 that is close to the CY26 expectation of 78%.

More specifically, investors question how the stock will react if growth slows from what will likely be 90% this year to 45% next year. Anticipation around that uncertainty has created a dynamic in which the company’s fundamentals continue to improve beyond even the highest expectations, yet the stock’s reaction remains muted.

Disclaimer