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China’s internet watchdog, the Cyberspace Administration of China, has ordered leading domestic tech firms -- including ByteDance and Alibaba (BABA) -- to halt purchases of NVIDIA’s (NVDA) AI chips (including its new RTX6000D) and cancel existing orders, per reporting from Financial Times. The directive follows China’s accusation that NVDA violated the country’s anti-monopoly law. This marks a significant escalation in China’s push to reduce reliance on U.S. technology and raises concerns about NVDA’s access to one of its historically important markets.

• NVDA’s RTX6000D chip, designed to meet U.S. export rules, has seen limited demand in China despite localization efforts.
• CEO Jensen Huang expressed disappointment, noting NVDA “can only be in service of a market if the country wants us to be,” underscoring the company’s limited options amid rising geopolitical strain.
• China made up 13% of revenue in FY25, falling to 9% in 1H26. No H20 chip sales were recorded in Q2, and none are expected in Q3. The impact is notable but manageable.
• NVDA’s AI momentum remains strong globally. Data Center revenue rose 56% yr/yr in 2Q26, with Blackwell platform sales up 17% sequentially.

Key catalysts for Blackwell growth include:

• Expanding demand from hyperscalers building next-gen AI training clusters.
• Increasing adoption by sovereign AI initiatives and large enterprises globally.
• Superior performance-per-watt and total cost of ownership metrics versus prior-generation chips.

Briefing.com Analyst Insight:

While the China news is clearly a headline risk and could limit NVDA’s near-term TAM, the broader picture remains resilient. The demand backdrop for AI infrastructure -- driven by training LLMs, enterprise AI adoption, and sovereign buildouts -- is still robust. That said, the declining China contribution, from 13% to 9%, and lack of visibility into future regulatory actions present a persistent overhang. Blackwell’s ramp and enterprise penetration are doing the heavy lifting for now, but longer-term, NVDA’s diversification beyond U.S. and hyperscaler customers will be critical to sustaining its premium valuation.