The recent U.S.-China summit concluded without addressing the ongoing deadlock over Nvidia's H200 AI chip exports, leaving the market to grapple with continued uncertainty.
The core issue is a summit of silence. President Trump's confirmation that H200 chips "did not come up" in talks with President Xi directly countered the market's recent optimism. Just a day earlier, Nvidia's stock jumped over 4% on reports that the U.S. had cleared around ten Chinese tech giants, including Alibaba and Tencent, to purchase these advanced chips. This created hope for a breakthrough, but the lack of high-level discussion suggests that while licenses may exist on paper, the political will to unlock actual shipments is absent on both sides.
To understand how we arrived here, we can trace a clear causal chain. First, the U.S. administration pivoted its policy in late 2025, shifting from a broad ban to a conditional allowance for H200 sales to "approved" Chinese customers, contingent on the U.S. government taking a 25% cut. This was an attempt to balance national security with commercial interests. Second, Beijing effectively countered this move not with a formal ban, but by withholding import permissions. Reports from early 2026 indicated that Chinese customs officials were instructed that H200s were "not permitted," creating a logistical and political blockade. Third, this standoff resulted in the current "licenses but zero deliveries" scenario. The market had hoped the summit would resolve this, but the leaders' decision to sidestep the issue confirms the stalemate continues.
For its part, Nvidia has already been managing investor expectations. At its GTC conference in March, the company guided the market to focus on the massive demand for its next-generation Blackwell and Rubin platforms from the U.S. and allied nations, explicitly excluding China from its near-term growth story. The stock's valuation reflects this reality; its Price-to-Earnings (P/E) ratio of around 48 is well below its historical average, suggesting investors are not pricing in a significant rebound in China revenue.
Ultimately, the summit's outcome reinforces the existing narrative: Nvidia's China business remains in limbo. The focus now shifts squarely to the company's upcoming earnings report on May 20, where investors will be looking for updates on the demand for its flagship products in markets outside of China.
- H200: An advanced AI accelerator chip developed by Nvidia, subject to U.S. export controls for sales to China.
- P/E Ratio (Price-to-Earnings Ratio): A valuation metric that compares a company's current share price to its per-share earnings. A lower P/E can suggest a stock is undervalued or that investors expect lower future growth.
- Blackwell/Rubin: The codenames for Nvidia's next-generation GPU architectures, succeeding the Hopper architecture (H100/H200). They represent the company's primary growth drivers.