Nvidia Will Restart H20 Shipments to China. Should You Buy NVDA Stock Here?

Nvidia (NVDA) shares are in focus after the company received U.S. government reassurances regarding the resumption of its crucial China business, which accounted for approximately 13% of its FY25 sales and had been impacted by export restrictions. CEO Jensen Huang's expressed intent to ship even more advanced chips to China signals a potential easing of trade tensions, removing a significant overhang on the stock. This development, alongside Nvidia's 80% rally since April, has led Needham to reiterate a 'Buy' rating and raise its price target to $200, while Wall Street maintains a 'Strong Buy' consensus ahead of anticipated strong Q2 earnings.

Analysis

Nvidia has received a significant catalyst with the U.S. government's reassurances regarding the resumption of its business in China, a market that constitutes a critical 13% of its fiscal 2025 sales, or approximately $17 billion. This development directly addresses the major overhang of U.S. export restrictions, which CEO Jensen Huang previously warned could result in an $8 billion revenue hit in a single quarter. Huang's subsequent statement expressing a desire to ship even more advanced chips to China than the H20 model signals a potentially strong recovery and growth in this segment. This positive geopolitical shift has prompted Needham to reiterate its 'Buy' rating and raise its price target to $200, implying an 18% upside from current levels. The broader market sentiment remains bullish, with a 'Strong Buy' consensus rating from Wall Street, ahead of a Q2 earnings release where per-share earnings are forecast to rise sharply to $0.95 from $0.65 in the prior year, reinforcing the fundamental strength underpinning the stock's recent 80% rally since its April low.

Key Decisions for Investors

• Given that the easing of China trade restrictions removes a primary overhang on the stock, investors may consider this a de-risking event that reinforces the bullish case ahead of strong anticipated Q2 earnings.
• Investors should monitor the upcoming earnings report for management's concrete guidance on the financial impact and timeline of resuming full-scale China shipments, as the stock's recent 80% appreciation has already priced in significant positive news.
• With Needham setting a $200 price target, long-term investors could view any potential consolidation or dips as opportunities to build a position, while keeping an eye on official U.S. policy announcements to confirm the verbal reassurances.