Could the reduced exposure to China lead to a shift in Nvidia's growth trajectory and affect its longâterm valuation multiples?
Impact on growth trajectory
Nvidiaâs revenue pipeline is still heavily weighted toward Chinaâderived AI, cloudâgaming, and dataâcenter demand. The âsofteningâ of U.S. export controls does not translate into a deâârisked exposure to the Chinese market; Beijingâs lingering distrust means the company will continue to face licensing delays, reduced sales of highââend GPUs, and limited access to the countryâs fastâgrowing AIâsupercomputer projects. If Chinese shipments stay constrained, Nvidiaâs topâline growth will have to be reââallocated to other regionsâprimarily the U.S., Europe and emergingâmarket OEMsâwhose demand cycles are slower and more priceâsensitive. The net effect is a downââshift in the growth curve versus the 30ââ40% YoY expansion the stock has historically been priced for.
Valuation implications
Longâterm P/E and EV/EBITDA multiples for a highâgrowth pureâplay like Nvidia are built on the assumption of sustained, doubleâdigit revenue acceleration. A material pullâback from China erodes that growth premium, prompting a reâârating of the multiple toward the midâ30Ă range (from the current 45ââ50Ă) as investors priceââin a more modest trajectory. On the technical side, the stock is testing the 200âday moving average around $330 and faces a bearish trendline from the recent $400â$420 highs; a break below the 200âday line could open a shortââterm pullâback to $300â$285, while a bounce above $340 would be needed to keep the upâtrend intact.
Actionable takeâaway
- Shortâterm: Look for a corrective move if the price falls below the 200âday average, targeting $300â$285 as a riskââmanaged entry for a contrarian long.
- Mediumâterm: Maintain a reduced exposure or hedge NVDA positions, as the upside is now capped by a lower growth ceiling and a likely compression of valuation multiples.
- Longâterm: Reâevaluate the fundamental model with a downââscaled China revenue assumption; if the revised growth rate falls below 25% YoY, consider trimming exposure or rotating into broader AIâexposure ETFs that capture the upside without the singleâstock China concentration risk.