Nvidia Will Give U.S. a Cut of Its AI Chip Sales to China. The Stock Gets a Bump.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Nvidia stcok inched up Monday after the Trump administration confirmed that a portion of its AI chip sales to China will go to the U.S. government.

in midday trading, shares were up 0.5%. The stock rose 1.1% on Friday. Nvidia rival AMD stock was up 1.63% after it climbed 0.2% on Friday.

Nvidia will pay 15% of the revenue they generated from AI chip sales to the government, President Donald Trump confirmed on Monday. He didn’t specifically address AMD, although The Wall Street Journal reported on Sunday that both companies agreed to the arrangement, citing people familiar with the matter.

The agreement will apply to Nvidia’s H20 chip and AMD’s MI308, both designed to meet U.S. government limits on performance for chip exports to China. The Commerce Department is now issuing licenses for shipments of both chips, according to the Journal.

“We follow rules the U.S. government sets for our participation in worldwide markets. While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,” an Nvidia spokesperson said in an emailed statement.

AMD and the Department of Commerce didn’t immediately respond to requests for comments early on Monday.

“We supposed 85% is better than zero %, but we aren’t sure we like the precedent,” Bernstein analyst Stacy Rasgon wrote in a note following the news. “We believe it is better to allow Nvidia (and AMD) to sell AI into China, as failure to do so effectively hands the Chinese market over to Huawei.”

The agreement could result in billions of dollars flowing to the government’s coffers. Rasgon said the 15% cut would equate to a “few billion dollars” for the U.S. government. That equals roughly 1% to 2% of Nvidia’s annual revenue, using the current $202 billion revenue consensus for fiscal 2026, according to FactSet.

In May, Nvidia CEO Jensen Huang said the decision to effectively ban sales of the H20 chip had a negative revenue impact of $10.5 billion in total across Nvidia’s April and July quarters.

It remains to be seen whether Chinese authorities will endorse the use of American-made AI chips. Nvidia was recently asked by a Chinese cybersecurity regulator to explain “backdoor security risks” associated with its chips. Nvidia has denied its chips include any back doors.

“The agreement, following a meeting between Nvidia’s Jensen Huang and President Trump, underscores the unpredictable policy environment and raises the prospect that similar demands could be made on other products,” wrote IG analyst Axel Rudolph in a research note.

Write to Adam Clark at adam.clark@barrons.com and Tae Kim at tae.kim@barrons.com