Markets
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Luke Kawa

Nvidia isn’t getting much credit for a recovery in its China business

Nvidia has talked a ton about the importance of accessing the Chinese AI market — especially after effectively getting locked out after export restrictions were enacted in mid-April.

That talk seemingly paid off: the chip designer has regained the ability to send its H20 chips to the world’s second-largest economy in exchange for sending 15% of revenues generated from those sales to the US government.

Already, those forgone sales have caused full-year revenues to be $10.5 billion lower than they otherwise would have, per Nvidia’s management, but it doesn’t seem like the company is being given much credit for this renewed access.

On the one hand, it appears analysts never fully incorporated a full loss of its H20 business into their forecasts. Or more likely, they did, but thought it would be outweighed by booming demand for AI chips elsewhere. Nvidia’s fiscal year sales estimates never went down by anything close to $10 billion after that export ban was put in place.

But despite delivering a Q1 sales beat and the investing world receiving reassurances from every hyperscaler that the AI boom is still going strong, Nvidia’s fiscal year sales estimates only recently surpassed where they were on April 15, right before export restrictions on the H20 came to light.

So some combination of...

...are all seemingly at play here.

It’s noteworthy that despite being much, much smaller than the $4 trillion chip designer, AMD’s full-year sales estimates are up by more than Nvidia’s since those export restrictions were initially enacted in mid-April. Of course, that doesn’t just reflect any enthusiasm over AMD’s sales to China, but also optimism over the prospects for AMD’s new AI chip.

AMD, for its part, did not include any revenues from sales to China in its most recent quarterly guidance, but management had a good reason: export licenses for its MI308s hadn’t been granted at the time.

That’s not the case for Jensen Huang and co. as Wednesday’s much anticipated earnings report and conference call await.

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Global automakers sink as Trump implies the trade war is heating back up

Shares of several major automakers with large footprints in China sank on Friday following President Trump’s threats to massively increase tariffs on goods from China in response to what he called “hostile” export controls.

Chinese EV titans like BYD, Nio, and XPeng plunged after Trump’s Truth Social post, along with automakers like Tesla and Stellantis that heavily rely on revenue from sales in the country.

EV makers like Rivian and Lucid, which source raw materials and or batteries from China, were also down following the post.

The move comes at a rocky time for US automakers, with the end of the EV tax credit expected to heavily ding sales for the rest of the year.

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Matt Phillips

Rare earth stocks spike after Trump says China should not be allowed to hold the world “captive” on rare earths

Shares of rare earth metal producers soared Friday after the president published a Truth Social statement decrying what he describes as Chinese efforts to control the pipeline of the sought-after minerals.

Companies such as MP Materials — which the US government recently took a stake in — USA Rare Earth, and Critical Metals jumped, suggesting investor bets that the the administration could play a bigger role in ensuring US access to rare earths.

Donald J. Trump (@realDonaldTrump)

Companies such as MP Materials — which the US government recently took a stake in — USA Rare Earth, and Critical Metals jumped, suggesting investor bets that the the administration could play a bigger role in ensuring US access to rare earths.

markets
Luke Kawa

US stocks sink after Trump says he’s considering a “massive increase” of tariffs on Chinese imports

More tariffs might be back on the menu.

US stocks reversed lower after US President Donald Trump said in a Truth Social post that he is considering a “massive increase” on tariffs of Chinese imports.

Trump said he’s mulling higher levies as well as “many other countermeasures” because of “the hostile ‘order’ that they have just put out” restricting the export of rare earth metals. He also seemingly canceled his upcoming meeting with Chinese President Xi Jinping in South Korea in two weeks, saying “now there seems to be no reason to do so.”

The SPDR S&P 500 ETF, Invesco QQQ Trust, and iShares Russell 2000 ETF all gave up early gains to fall more than 1%. A basket of stocks compiled by Goldman Sachs of US companies that have significant revenue exposure to China is off more than 2%.

Wafer fab equipment stocks Lam Research, Applied Materials, and KLA Corp, which all count China as their top market, are underperforming, as is iPhone seller Apple.

Chip stocks Advanced Micro Devices, Intel, Broadcom, and Nvidia are all getting hit on the news, as rare earths are needed components for semiconductor production. For Tesla, it’s a similar story given its footprint in China and the importance of rare earths for EVs.

There’s also a lot of plain old dumping of recent winners.

Super Micro Computer, Coinbase, and Robinhood Markets are among the biggest laggards since Trump’s post as investors cut risk.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

The rare earth curbs are far from the only recent example of China stepping up its defense of domestic industry and resources. Qualcomm is the subject of an antitrust investigation, stringent checks of semiconductor shipments are reportedly in place as officials look to keep Nvidia’s chips from entering the country, and separate reporting indicates that US ships will be charged an escalating fee for docking at Chinese ports.

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