By Laura Bratton
Publication Date: 2026-01-16 11:00:00
Nvidia’s (NVDA) China business continues to face geopolitical hurdles, which could pose longer-term competitive risks for the AI chipmaker.
Ongoing US-China tensions have upended Nvidia’s sales in what was one of its largest markets. In the company’s most recent quarter, revenue from China, which includes Hong Kong, dropped 45% from a year ago to about $3 billion, according to Bloomberg data.
And while the Trump administration green-lighted the sale of Nvidia’s H200 chip to China this week, albeit with a 25% tax, Reuters reported that China is barring imports of the GPUs except in special cases.
So far, Nvidia’s dominant position in the chip market doesn’t appear to have suffered much after the company initially lost access to the Chinese AI market in 2025. It became the first company with a $5 trillion valuation last fall. Despite a decline in China sales, its third quarter revenue overall soared more than 60% during the period to about $57 billion.
But over the long term, the Chinese commercial sector’s development and use of domestic chips could narrow Nvidia’s lead on the global stage, Wall Street analysts told Yahoo Finance.
They said Nvidia’s dominance in AI software could suffer if Chinese tech developers begin making advances in open source alternatives, which would hurt its leadership in hardware as well.
“That’s the real nightmare scenario,” Seaport analyst Jay Goldberg said.
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