Nvidia’s stock has fallen by more than 30% since 2025 began, wiping out over $1 trillion in value. Despite growing demand for its data center revenue tied to artificial intelligence (AI), investors should be cautious about the company’s prospects.
A significant portion of Nvidia’s revenues are at risk due to ongoing trade tensions between the US and China. The company may need to take a $5.5 billion charge related to H20 chips intended for sale in China, which must now obtain licenses to export these AI chips to the country.
New data suggests that China actually accounts for up to 30% of Nvidia’s sales base, although only about 2% of those sales are exported directly to Singapore and end up being shipped elsewhere. This could be an understatement, as many shipments may end up in China instead. The Chinese government has been vocal about reducing its dependence on foreign chipmakers.
Nvidia’s premium valuation makes it vulnerable to a decline in sales from the region. With shares currently trading at 18.4 times trailing sales and 11.7 times forward sales, there is little room for error. Losing China as a customer would be a long-term blow to Nvidia’s growth prospects, making this headwind critical to watch for investors moving forward.
Source: https://www.fool.com/investing/2025/04/25/nvidia-sales-drop-trade-war-china-nvda