Why is Nvidia stock falling despite China chip export resumption

Nvidia NVDA stock fell about 1.2% on Wednesday as investors weighed renewed exports of the company's H200 artificial intelligence chips to China, ongoing export control scrutiny in Washington, and fresh developments in its AI business.

The decline came despite a series of positive updates surrounding Nvidia's long-term growth prospects, including a higher price target from KeyBanc, CEO Jensen Huang's comments on next-generation AI hardware production, and a new partnership milestone with Nokia.

US trade officials confirmed that Nvidia has begun shipping H200 AI chips to China after receiving government approval under a case-by-case licensing process.

Nvidia stock regained some of the losses and was trading down 0.73% at the time of writing.

US resumes limited H200 exports to China

Jeffrey Kessler, Under Secretary of Commerce for Industry and Security, told the House Foreign Affairs Committee that Nvidia had started exporting H200 chips to China, although volumes remain limited.

"There have been minimal exports of any H200s to China so far," Kessler testified, describing the initial deliveries as "very few".

According to Reuters, around 10 Chinese companies have been approved to receive advanced AI hardware from Nvidia and Advanced Micro Devices.

Those approved include Alibaba, Tencent, ByteDance and a unit of ZTE, with applicants required to satisfy national security requirements and submit to inspections.

The approvals triggered political debate in Washington.

Representative Gregory Meeks criticized the administration for approving advanced AI chip licenses, arguing that export controls were being used as "a bargaining chip in broader negotiations with China."

Meanwhile, Representative Bill Huizenga raised concerns that overseas subsidiaries of Chinese companies could exploit regulatory loopholes to retain advanced Nvidia Blackwell chips.

Analysts remain bullish on AI demand

Despite the geopolitical uncertainty, Wall Street remained constructive on Nvidia's long-term outlook.

KeyBanc maintained its Overweight rating and raised its price target to $330 from $310.

Analyst John Vinh described Nvidia's supply outlook as "mixed but mostly positive."

The brokerage acknowledged that Nvidia's next-generation Vera Rubin architecture faces modest production delays related to thermal heat lid issues and HBM4 memory qualification with SK Hynix.

However, KeyBanc said it sees "minimal risk to estimates."

The firm expects Nvidia to offset any delays by increasing shipments of its B300 GPUs as demand for AI infrastructure remains strong.

Separately, Jensen Huang dismissed reports that the Vera Rubin platform had been delayed.

Speaking in Tokyo about Nvidia's role in Japan's artificial intelligence ambitions, Huang said the company's high-end AI accelerator systems remain on schedule for customer deliveries at "giant" production volumes.

Earlier this year, Huang also said Vera Rubin had entered full production using high-bandwidth memory supplied by Samsung Electronics, SK Hynix and Micron Technology.

Nokia partnership expands AI network ambitions

Nvidia also announced new AI-powered radio access network technology developed jointly with Nokia.

The companies said the new software and hardware platform is expected to become commercially available next year and could allow telecommunications operators to double the amount of data transmitted over existing spectrum by 2028.

"With Nokia, Nvidia is “transforming RAN into a planet-scale AI computer,” Nvidia CEO Jensen Huang said in the statement. “This is a generational shift for operators."

The partnership forms part of Nokia's broader strategy to expand software revenue and capitalize on AI infrastructure growth beyond traditional telecommunications equipment.

Meanwhile, Nvidia continues to recover relative to the broader semiconductor sector.

Although the stock has gained 11% this year, compared with a 72% advance in the PHLX Semiconductor Index, it has recently outperformed as chip stocks pulled back.

Nvidia's market capitalization also remains above the $5 trillion mark after regaining the milestone earlier this week.