After a three month ban, U.S. officials have now eased export curbs on H20 chips to China, likely as part of a broader cooling of trade tensions. This timing coincides with a recent truce where China relaxed rare earth export controls. Jensen has been optimistic that the H20 issue would sort itself out, so the news is in some ways expected, but the timing was six months earlier than I had predicted. However, these resumed sales come with caution that the geopolitical risk still exists. The U.S.-China relationship remains fraught, and this pause in the curbs could be temporary. I believe that despite the pause in the ban, Chinese firms will continue diversifying their chip sources to protect supply chains. In other words, there is no guarantee H20 chips will remain available to China indefinitely.

The U.S. ban on H20 shipments imposed earlier this year removed 15% of revenue overnight, based on comments from the company on the April earnings call. With the ban now lifted, part or all of that lost business will return. In theory, this full reversal would boost consensus estimates by 15%. In reality, a portion of the Street had already baked the lifting of the curbs into their models. By my estimate, roughly 20% of the 40 analysts covering Nvidia (about 8 analysts) assumed a mid-year H20 sales resumption even before this announcement. That means the incremental lift to overall Street numbers should be on the order of 10%, rather than the full 15%. I expect Wall Street consensus will move up on this development.

Putting it together, I expect the Street’s current 25% y/y revenue growth forecast for calendar 2026 could rise to around 30 to 35% with China back in the mix. Either way, regaining access to China’s AI demand is a significant tailwind for the business.

Stepping back, this episode highlights just how strategic and early the AI buildout remains. The fact that export curbs on AI chips became a bargaining chip in U.S.-China trade negotiations underscores how critical AI technology is to both industries and national interests. China’s hunger for top-tier GPUs for everything from commercial AI projects to national security confirms that the race for AI capability is intensely important.

Beyond the H20 news, we see increasing evidence that we are still early in AI: recently, Meta Platforms is aggressively investing in AI through its Superintelligence Labs, and non-tech executives are openly acknowledging AI’s transformative potential—including the CEO of Ford suggesting that “artificial intelligence is going to replace literally half of all white collar workers in the US.” These are the latest datapoints indicating that the AI paradigm shift is still in its early stages. Six months ago, I might have said we were in the third inning (perhaps ~30% of the way through the AI investment cycle); now my sense is we’re only in the second inning, maybe 20% of the way, with far more growth and innovation ahead than behind. For Nvidia, this means that beyond the near-term China sales bump, the overall demand for its AI chips is likely to stay stronger for longer.

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