Shares of Nvidia Corp. (NVDA) surged on Tuesday after the company said it expects to resume shipments of its H20 AI chip to China, a surprise development that boosted ETFs that hold the stock.
In a blog post, Nvidia said it is filing applications to restart shipments of the H20 GPU, a China-specific, modified version of its flagship AI chips designed to comply with U.S. export controls.
The U.S. government has assured the company that licenses will be granted, and Nvidia hopes to begin deliveries soon. This marks a potential reversal of months of halted sales that began in April, when new U.S. restrictions effectively blocked Nvidia from shipping those chips to China without a special license.
Nvidia previously estimated it lost $2.5 billion in H20 sales in the first quarter due to the ban and forecast an additional $8 billion hit in the second quarter. The potential resumption of shipments is a major win for the company.
CEO Jensen Huang has argued that locking Nvidia out of the Chinese market would ultimately backfire, pushing business toward domestic Chinese rivals like Huawei and accelerating the country’s chip-making capabilities. Huang has reportedly met with President Donald Trump multiple times, including shortly before Tuesday’s announcement, suggesting his message may be getting through.
In addition to the H20 update, Nvidia also unveiled a new chip specifically designed for the Chinese market. The “NVIDIA RTX PRO GPU,” which is fully compliant with U.S. export rules, is geared toward digital twin AI for smart factories and logistics.
Nvidia stock jumped 4.5% as of midday Tuesday, pushing its market cap above $4.2 trillion, further cementing its position as the most valuable company in the world. The rally lifted several major ETFs where Nvidia holds a dominant position.
The SPDR S&P 500 ETF Trust (SPY) has a 7.5% weighting in the stock, the Invesco QQQ Trust (QQQ) has a 9.5% weighting and the VanEck Semiconductor ETF (SMH) has a 21% weighting.
On the day, SMH rose 2.2%, QQQ climbed 0.5% and SPY hovered near unchanged.
With AI still the dominant theme in financial markets, Nvidia’s reentry into China could have big implications for both the company and the many ETFs tied to its success.
finance.yahoo.com
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