What are the long‑term growth implications of unlocking the Chinese market for Nvidia and AMD?

Long‑term growth outlook

Unlocking China removes one of the biggest revenue caps for both Nvidia and AMD. China accounts for roughly 15‑20 % of global PC/GPU demand and a growing share of AI‑accelerator sales, especially in data‑center, AI‑research, and cloud‑gaming workloads. By securing a “re‑export” channel that allows a portion of China‑derived revenue to be remitted to the U.S. Treasury, the companies can now ship high‑margin products (e.g., Nvidia H100/ A100, AMD Instinct MI300, and consumer RTX/ Radeon lines) to the country’s > 1‑billion‑device ecosystem. Over a 5‑year horizon, the incremental addressable market could add $2–3 bn in annual revenue for Nvidia (roughly 5–6 % of its 2024 sales) and $1–1.5 bn for AMD, assuming a conservative 10 % market‑share capture. The growth is not just linear revenue – the Chinese AI‑cloud push accelerates adoption of high‑end GPUs, raising the average selling price (ASP) and enhancing the companies’ leverage in the AI‑computing “platform” ecosystem, which translates into higher long‑term gross margins (Nvidia’s 70‑%+ gross margin, AMD’s 45‑%+).

Trading implications

Fundamentals: The deal improves earnings visibility. Consensus forecasts for FY25 now include a 5‑10 % upside in revenue and EPS for both firms, supporting a mid‑term price target uplift of 12‑18 % for NVDA and 10‑14 % for AMD. The incremental cash flow improves capital‑allocation flexibility for R&D and stock‑buyback programs, which could further support valuations.

Technical: Nvidia is trading near its 200‑day moving average and has broken above the 50‑day EMA with a bullish 1‑month RSI (≈ 62). The breakout above the $450‑$470 range on higher volume suggests the market is already pricing in the China lift. AMD similarly holds above its 50‑day EMA and shows a bullish flag on the 4‑hour chart; a breakout above $115 would be a strong entry signal.

Actionable: For investors with a long‑term horizon, consider adding to positions on pull‑backs (NVDA 5‑10 % dip, AMD 3‑7 % dip) with a stop‑loss 5‑7 % below entry to manage geopolitical risk. For tactical traders, a bull‑call spread (e.g., NVDA $460‑$500 call spread, 6‑month expiry) captures upside while limiting downside if regulatory back‑track occurs. Keep an eye on any US‑China policy updates; a reversal could trigger a 10‑15 % short‑term correction but the underlying structural demand remains intact.