Nvidia Stock Slips. Trump’s China Deal Comes with Complications.

Nvidia CEO Jensen Huang negotiated a revenue-sharing deal with President Donald Trump. (Photo by PATRICK T. FALLON/AFP via Getty Images)

Nvidia was edging down on Tuesday as markets digested its planned revenue-sharing agreement with the U.S. government in regards to its artificial-intelligence chip sales in China.

Nvidia shares were down 0.8% at $180.69 in morning trading. The stock fell 0.4% on Monday.

The stock narrative continues to be dominated by news that Nvidia and smaller rival Advanced Micro Devices struck a deal with the White House to be able to sell AI chips to Chinese customers, in exchange for remitting 15% of the revenue generated to the U.S. government.

“We believe the potential combined annualized revenue run rate for these chips to be about $30 billion to $35 billion, which would essentially result in about a $5 billion revenue tax over the next year,” wrote CFRA analyst Angelo Zino in a research note. “We acknowledge the tax will have a negative impact on profit margins tied to China sales but view the re-entry into the second-largest GPU market to be worth the cost.”

Nvidia would benefit from being permitted to sell its processors in China, but the deal with the Trump administration is likely to face legal scrutiny, meaning there’s uncertainty about how big the boost will be.

Additionally, it isn’t clear if Beijing is keen on permitting widespread use of Nvidia hardware. Chinese authorities have urged domestic firms not to use H20 chips for government-related work, according to multiple reports on Tuesday.

“As both governments recognize, the H20 is not a military product or for government infrastructure. China has ample supply of domestic chips to meet its needs. It won’t and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China,” an Nvidia spokesperson said in an emailed statement.

Trump suggested in a press conference on Monday that he would also consider allowing Nvidia to sell a watered-down version of its current-generation Blackwell hardware in China, in addition to the currently permitted H20 chip.

“A somewhat enhanced-in-a-negative-way Blackwell. In other words, take 30% to 50% off of it,” Trump told reporters.

One issue that Nvidia can’t control is whether access to its hardware is being used as a bargaining tool in negotiations between the U.S. and China. Trump extended a trade truce with China through Nov. 9 on Monday, as Washington and Beijing look to reach a permanent agreement on tariffs.

Among other chip makers, Advanced Micro Devices was dropping 1.5% and Broadcom was up 0.5% in morning trading.

Write to Adam Clark at adam.clark@barrons.com