Nvidia (NVDA)
Morningstar has updated their coverage on Nvidia Corp, after he company received a significant policy win after U.S. President Donald Trump announced that the company will be permitted to resume selling its H200 AI accelerators, a roughly two-year-old generation of AI GPUs into the Chinese market. Although the U.S. government will impose a 25% revenue cut on Nvidia’s China H200 sales, higher than the previously discussed 15%, Morningstar sees this as an important step toward rebuilding Nvidia’s China AI business.
Morningstar emphasizes that this development helps establish a clearer path for future revenue growth from China, a market that contributed meaningfully to Nvidia’s data-center GPU sales prior to U.S. export restrictions. However, the firm cautions that policy uncertainty remains high, and future reversals or additional restrictions cannot be ruled out.
At the same time, Morningstar notes that China’s government has recently encouraged domestic AI developers to shift away from Nvidia components in favor of local alternatives. As a result, the H200’s adoption in China is not guaranteed, despite its superior performance compared with the lower-end H20 model previously approved for sale. Still, Trump’s statement that President Xi “responded positively” suggests that some level of cooperation may help Nvidia regain traction in the region.
Despite the geopolitical back-and-forth, Morningstar is maintaining its $240 fair value estimate for wide-moat Nvidia, arguing that the shares remain undervalued relative to long-term fundamentals. Morningstar sees the recent selloff in AI-driven stocks as a buying opportunity for investors who can tolerate volatility.
The research firm continues to assign certain aspects in the sector with uncertainty, reflecting the numerous variables influencing the company’s future, such ad U.S.-China policy tensions, global AI chip demand, competitive dynamics, and technological progress in large language models and hyperscale infrastructure. Morningstar specifically highlights the strength of Google’s Gemini AI model, which leverages Google’s in-house silicon, as a competitive risk that could affect Nvidia’s dominance in AI accelerators over time. Overall, Morningstar views the U.S. approval for H200 China sales as a positive but measured step for Nvidia, acknowledging both the revenue upside and the geopolitical risks that continue to shape the firm’s long-term outlook.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
