Analysts raise Nvidia price targets after Trump's China chip decision. One sees $5 trillion market cap ahead

Nvidia has secured U.S. clearance to resume H20 chip sales to China, a development widely viewed by analysts as a significant tailwind for the company. This has prompted multiple price target upgrades, with some analysts projecting a $5 trillion market capitalization, as the move is expected to recover billions in lost revenue, accelerate future growth, and mitigate structural risks by preventing market share loss to competitors like Huawei. While most analysts are bullish on the outlook, some advise a cautious 'wait and see' approach before fully incorporating China's contribution into financial models.

Analysis

Nvidia has secured U.S. government clearance to resume sales of its H20 chips to China, a development viewed as a significant tailwind that has prompted a wave of positive analyst revisions. The core of the optimism stems from the potential revenue recovery, with Melius Research suggesting the entirety of the previously lost ~$8 billion quarterly run rate could return by the fourth quarter of fiscal 2026. This is further amplified by Evercore ISI's forecast of a potential $10 billion in near-term revenue from written-down inventories, which would carry unusually high gross margins. From an earnings perspective, Bernstein estimates that recovering $15-$20 billion in China revenue could add 40-50 cents to FY2026 EPS, representing over 10% accretion. Strategically, analysts note that re-entry into the Chinese market is crucial for mitigating the structural risk of ceding market share to domestic competitors like Huawei, thereby preventing the growth of rival AI ecosystems. While the consensus is strongly bullish, reflected in price target hikes from multiple firms and the stock's nearly 28% year-to-date advance, Citigroup advises a cautious "wait and see" approach before fully factoring the China contribution back into financial models.

Key Decisions for Investors

• Investors should recognize the resumption of H20 chip sales to China as a significant positive catalyst, with analysts forecasting a potential recovery of an approximately $8 billion quarterly revenue run rate and over 10% EPS accretion for fiscal year 2026.
• Beyond the immediate financial uplift, consider the strategic benefit of Nvidia re-engaging in the Chinese market, which mitigates the long-term risk of ceding ground to local competitors like Huawei and fostering rival AI ecosystems.
• Given the wave of price target increases, with some analysts projecting a path to a $5 trillion market capitalization, investors may want to re-evaluate valuation models to incorporate this new growth trajectory and potential for significant margin expansion on initial inventory sales.
• Despite the bullish consensus, it is prudent to monitor the actual pace and volume of shipments to China, as a cautious approach may be warranted before fully baking the recovered revenue into forward-looking models.