Nvidia and the China factor: sales are expected to rise, but there is a risk regarding Taiwan

Against this backdrop, it is clear that Nvidia is raring to get back into the chip game in China. Will this determination enable the group to turn back the clock to before the tariffs began? Experts believe not. Antoine Chkaiban, an analyst at New Street Research, pointed out that ‘China has historically accounted for 20–25 per cent of Nvidia’s data centre business’. Following Donald Trump’s ‘Niet’ on H20, that share has effectively dropped to zero. ‘The current forecast is that this share could recover, reaching 10–15 per cent. And that’s in the long term.’ “In fact,” echoes Giacomo Calef, Country Manager at NS Partners, “we mustn’t forget that local firms, such as Huawei, are developing their own high-tech solutions. This competition will inevitably prevent Nvidia from returning to the market shares it held just a year ago.” Furthermore, Calef continues, “I believe the benefit will be mainly in the short term. In the longer term, I don’t see such a significant upturn in business in the former Middle Kingdom.”

Yes, the former Middle Kingdom. The latter, still on the subject of processors, is a key factor in another respect: Taiwan. It should be noted that the group is ‘fabless’. In other words, it relies on third parties for the manufacture of its processors. Among these is TSMC. As is well known, the company – despite its push for geographical diversification (new facilities, for example, in the US) – operates primarily in Formosa. That is to say: the island at the centre of the fierce dispute between the United States and China. In such a context, there is a risk that problems could arise along the supply chain. In 2024–2025, according to Bloomberg Terminal, 15.7 per cent of Nvidia’s revenue was generated in Taiwan. It is true that the group has reduced its reliance on production based on the island. In 2016, for example, this accounted for 36.8 per cent of the total. Furthermore, TSMC is still a supplier to many other major technology companies. So, the sword of Damocles hangs somewhat over the entire sector. That said, however, the underlying problem remains for the Californian company as well.

In conclusion, therefore, China represents a significant factor for the ‘queen of chips’ business. It is an unknown quantity that can both benefit (the business) and, at the same time, harm it. This is an ambivalence that the DIY investor must take into account.

The financial performance must also be taken into account. In general, turnover and profitability have increased. In the last quarter, the company reported revenue of $44.06 billion (+69 per cent year-on-year) and a net profit of $18.77 billion (+27 per cent compared with the same period in the 2024–2025 financial year). In both cases, the figures – despite the impact of Donald Trump’s ban on H2O at the time – exceeded estimates. Following the publication of the figures, the share price rose by 3.25 per cent. That said, however, it is interesting to look at the trends – for example, over the last six quarters – in both turnover and gross margin. What emerges? It appears that – quarter on quarter – the financial figures have slowed. In particular, the non-GAAP gross margin stood at 78.9 per cent in the first quarter of 2024–2025. Then, in the second and third quarters, the figure fell to 75.5 per cent and 75 per cent respectively. Finally, after reaching 73.5 per cent two quarters ago, it settled at 60.5 per cent in the first three months of 2025–2026. Of course! Without the negative impact of the ban imposed by Washington – which should now be lifted – the gross margin would have been 71.3 per cent. And yet, profit margins have slowed. Why, then, has the share price continued to rise? The answer is complex. First and foremost, the structural trend in artificial intelligence – coupled with the view that Nvidia is strategically well-positioned – is prompting investors to buy. When quarterly results beat estimates – albeit estimates that are becoming less ambitious quarter on quarter – the opportunity to ‘buy’ is there. Especially if the retail investor crowd is dominating the stock market on Wall Street and the Nasdaq. That is to say: investors – in some cases sophisticated – but generally inclined to follow the trend. But that’s not all. Another factor is technical in nature: when a company’s market capitalisation becomes so significant, various equity products (ETFs) and institutional portfolios (benchmark funds) are ‘obliged’ to buy shares in the company in question. ‘That said, however,’ Calef is keen to point out, ‘Nvidia is trading at high multiples. Indeed, in a normal context, the current P/E ratio of 52 times is ‘nonsense’. Consequently, the utmost caution is required, as – despite the group being solid and well-managed – the pressure is always on to beat consensus estimates.”

Faced with such a scenario, it may be helpful to see what technical analysis has to say. “In this regard,” explains independent analyst Silvio Bona, “the share price had, until recently, been trading sideways.” A “rectangle pattern” that “began” towards the end of June 2024 and “ended” on 2 July. In the most recent trading session, “Nvidia definitively broke above the resistance level – which has now become support – that formed the ‘ceiling’ of the rectangle itself and was situated around the $154 mark”. The shares are now at all-time highs and, therefore, ‘it makes little sense to provide guidance on any potential targets. What is important, given that the resistance was broken on relatively low volumes, is that the share price does not fall back below the $145–$154 range. This is to confirm the continued bullish trend. Beyond that, it must be borne in mind that, in the current context, the so-called ‘make-or-break’ situation has materialised. In very simple terms, this is a decisive moment: either the price, having broken through the key resistance level, continues to rise, or it stops and retraces.”

Share price performance

Technical analysis of the share

The analysis by Finlabo Research