Nvidia Makes Bold Moves to Keep Its Market Capitalization Moving
Nvidia is free to trade with China and sell its best components there, opening the doors for far greater profits and revenue.
Quick overview
- Nvidia is poised to approach a $5 trillion market capitalization as it benefits from the lifting of U.S. restrictions on AI component sales to China.
- With the ban lifted, Nvidia can now sell high-end AI components in China without incurring fines, potentially increasing its market share and profits.
- The company has surprised investors with its quarterly earnings and is focusing on revenue growth, particularly from the rapidly expanding AI market in China.
- Nvidia is also transitioning its CUDA computing platform to RISC-V, allowing consumers to build custom CPUs without licensing fees, which could enhance profitability.
Nvidia (NVDA) might not have peaked yet. The company with the world’s largest market capitalization looks like it is pressing toward $5 trillion with some recent moves.
Nvidia is definitely benefitting from open access to China now that the United States has dropped restrictions on selling AI components to its trade partner and rival. For years, the United States government restricted the selling of certain high end AI components to China in a bid to keep the AI-tech war in the U.S.’ favor. Now that the ban is old news, Nvidia can enjoy free trade with what may prove to be its most profitable market.
Before the ban was dropped, Nvidia was selling lower end AI components to China and then paying fines to sell the higher end ones. They feared a cheaper alternative from their competitors being offered in China, but that may not be a problem anymore. Now, Nvidia can set their own price and not worry about the extreme fines they were being subjected to in that market.
Nvidia Changes Things Up
There are a few big changes happening with Nvidia as they seek to keep gaining more market share and increasing earnings from quarter to quarter. Nvidia surprised investors with their last quarterly earnings report, and they have set their sights on increasing revenue for the current quarter. As a result, TheStreet Pro raised their stock price guidance for Nvidia, moving it from 4185 to $200.
Some of that will come from China now that Nvidia can focus more there. In 2024, Nvidia brought in 13% from its revenue from China. The rapidly growing AI market there is going to be a big money maker for Nvidia now the tit can sell its highest end chips there unimpeded.
Nvidia’s own CUDA computing platform will be making its way to RISC-V, which enables consumers to build their own CPU using open source architecture. If anyone can use Nvidia software to build a custom computing system without the need for a license. If Nvidia can avoid having to pay for ARM licensing like it currently is, the company can save a lot of money and help out their profits for the coming months.
Nvidia’s stock price dropped 2.16% on Tuesday to $167.69. Overall, it is well above its average for the month and has been growing through much of July.
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