Shares of Nvidia (NVDA) fell 2% yesterday after Chinese tech giant Huawei said it will begin shipping in large numbers its 910C AI chip to replace Nvidia's H20 chip that were recently blocked from export.
The chipmaker had said it would be taking a massive $5.5 billion charge related to its AI chip inventory, purchase commitments, and related reserves. While many investors thought this could be a temporary situation until the tariff issue with China was resolved, this development means Nvidia could permanently lose a large and important market.
NVDA stock continues to fall in premarket trading, though it is only down less than 1% at the moment.
Huawei's 910C chip is not as advanced as Nvidia's, but combines two processors that doubles memory and computing power to allow it to be used for AI tasks. It is expected to become the primary chip developers turn to. With Beijing pushing Chinese companies to choose domestic suppliers over foreign companies, this could be a long-term hit to Nvidia.
The writedown Nvidia is taking represents almost 5% of the chipmaker's entire $115.2 billion data center segment revenue for fiscal 2025.
Nvidia was once worth over $3 trillion and was the most valuable stock on the market, but has lost over a half trillion dollars worth of value since the start of the year. NVDA stock is down 20% in 2025 and currently trades below $109 per share.
The stock hit a low point in early April of $81 a share and the latest development could see it test those lows once more. At a minimum there appears to be more opportunity for further share losses.
However, if NVDA does fall so low, I'd view it as a buying opportunity. Assuming the trade war with China does get resolved and Nvidia is allowed to begin exporting its chips there once again, it is likely buyers would switch back to its AI chips because they are more advanced.
While a lot depends on how long the stalemate drags on, with the AI market still rapidly evolving, there could be more opportunities for Nvidia to make up those lost China sales.
