Former Goldman Partner Claims Nvidia's China Revenue Underestimated
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 38 minutes ago
0mins
Source: stocktwits
- China Market Potential: Former Goldman Sachs partner Michael Parekh estimates that Nvidia could add $10 billion in revenue if sales in China normalize, indicating that the demand for AI in China is substantial and not fully reflected in Nvidia's current revenue figures.
- Sales Restrictions Impact: Nvidia reported zero revenue from China in Q1 due to U.S. restrictions on H20 chip sales, and Parekh noted that if a future meeting between U.S. and Chinese leaders results in sales approval, analysts would need to reassess Nvidia's revenue forecasts, potentially leading to an immediate re-rating of the stock.
- Indirect Revenue Channels: Despite Nvidia's official revenue from China being zero, Parekh emphasized that China is acquiring Nvidia chips through various channels, suggesting the existence of indirect revenue that could influence market perceptions of Nvidia.
- Huawei Competitive Challenges: Parekh pointed out that while China is pushing Huawei to develop its own chips, Huawei's technology lags behind Nvidia's, and he estimates that China will remain reliant on Nvidia's technology for at least the next five years, highlighting the interdependence between the two countries in the AI sector.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 219.510
Low
200.00
Averages
264.97
High
352.00
Current: 219.510
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is an artificial intelligence (AI) infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. Its segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions, including software. The Graphics segment includes GeForce GPUs for gaming and personal computers (PCs), and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Its technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits (SDKs), and application programming interfaces (APIs). Its platforms address four markets, which include Data Center, Gaming, Professional Visualization, and Automotive.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Sales Restrictions Impact: Nvidia reported zero revenue from China in Q1 due to U.S. restrictions on H20 chip sales, and Parekh noted that if a future meeting between U.S. and Chinese leaders results in sales approval, analysts would need to reassess Nvidia's revenue forecasts, potentially leading to an immediate re-rating of the stock.
- Indirect Revenue Channels: Despite Nvidia's official revenue from China being zero, Parekh emphasized that China is acquiring Nvidia chips through various channels, suggesting the existence of indirect revenue that could influence market perceptions of Nvidia.
- Huawei Competitive Challenges: Parekh pointed out that while China is pushing Huawei to develop its own chips, Huawei's technology lags behind Nvidia's, and he estimates that China will remain reliant on Nvidia's technology for at least the next five years, highlighting the interdependence between the two countries in the AI sector.
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- CPU Revenue Expectations: Nvidia anticipates standalone CPU revenue to reach $20 billion this year, which will provide a new revenue stream and position the company as a potential leading CPU supplier globally.
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- Data Center Dominance: Over 92% of total revenue ($75.2 billion) came from the data center business, indicating that this segment will continue to be Nvidia's primary revenue generator, solidifying its market leadership.
- New Market Opportunity: The introduction of Nvidia's Vera Rubin platform into a $200 billion total addressable market signifies a pivotal shift from being a graphics chip manufacturer to a comprehensive AI hardware ecosystem, opening new revenue streams.
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See More
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- New Growth Driver: CEO Jensen Huang announced the new product Vera Rubin, expected to become a significant growth engine focused on agentic AI, potentially opening a $200 billion market for the company and further solidifying its leadership in the CPU market.
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- China Market Potential: Former Goldman Sachs partner Michael Parekh estimates that Nvidia could add $10 billion in revenue if sales in China normalize, indicating that the demand for AI in China is substantial and not fully reflected in Nvidia's current revenue figures.
- Sales Restrictions Impact: Nvidia reported zero revenue from China in Q1 due to U.S. restrictions on H20 chip sales, and Parekh noted that if a future meeting between U.S. and Chinese leaders results in sales approval, analysts would need to reassess Nvidia's revenue forecasts, potentially leading to an immediate re-rating of the stock.
- Indirect Revenue Channels: Despite Nvidia's official revenue from China being zero, Parekh emphasized that China is acquiring Nvidia chips through various channels, suggesting the existence of indirect revenue that could influence market perceptions of Nvidia.
- Huawei Competitive Challenges: Parekh pointed out that while China is pushing Huawei to develop its own chips, Huawei's technology lags behind Nvidia's, and he estimates that China will remain reliant on Nvidia's technology for at least the next five years, highlighting the interdependence between the two countries in the AI sector.
See More
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- New Market Opportunities: The introduction of the Vera Rubin platform, designed specifically for agentic AI, is expected to unlock a $200 billion market, marking Nvidia's transition from a graphics chip manufacturer to a comprehensive AI utility ecosystem.
- CPU Revenue Expectations: Nvidia anticipates standalone CPU revenue to reach $20 billion this year, which will provide a new revenue stream and position the company as a potential leading CPU supplier globally.
- Industry Influence: As a key player in the AI ecosystem, Nvidia's performance not only impacts its own stock price but also sets benchmarks for the entire industry, attracting significant market attention.
See More
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- Impressive IPO Performance: Cerebras' stock surged 68% on its first trading day, reflecting strong investor enthusiasm for AI stocks and potentially setting the stage for future market performance.
- Significant Technological Edge: Cerebras' Wafer Scale Engine 3 (WSE-3) claims to offer 250 times more on-chip memory and 2,625 times more memory bandwidth than Nvidia's B200 package, which could fundamentally alter the landscape of AI processing if widely adopted.
- Major Partnership Agreement: OpenAI has signed a $20 billion multi-year compute capacity agreement with Cerebras, securing up to 750 megawatts of specialized AI infrastructure power and potentially acquiring an 11% equity stake in the company, indicating strong market validation of its technology.
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- Technological Innovation Potential: Cerebras' new wafer technology claims to be more efficient than Nvidia's, with its Wafer Scale Engine 3 offering 250 times more on-chip memory and 2,625 times more memory bandwidth, potentially reshaping the AI processing landscape, although its long-term impact remains uncertain.
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