Over the past two years, NVIDIA (NASDAQ: NVDA) has become the defining symbol of the artificial intelligence era, with its revenue, profit, and stock price growth far surpassing every market expectation.
From a graphics card manufacturer, NVIDIA has transformed itself into the core infrastructure platform of the global AI industry.
However, as U.S.–China trade tensions flare up again, investors are beginning to question whether this “miracle growth engine” may soon face a new kind of limit — not technological, but political and supply-chain related.
From a fundamental perspective, NVIDIA’s financial strength remains exceptional. In fiscal year 2025 (February 2024 – January 2025), the company generated over $130 billion in revenue, doubling from the previous year.
This surge was driven primarily by soaring demand from data centers and the wave of investment in AI infrastructure by tech giants such as Microsoft, Google, Amazon, and Meta.
Its gross margin remained around 74–75%, underscoring NVIDIA’s near-monopolistic advantage in GPUs and specialized software. With its proprietary CUDA ecosystem and the advanced Blackwell architecture, the company controls over 80% of the global AI-GPU market — leaving rivals like AMD and Intel struggling to catch up.
Yet, despite its dominance, NVIDIA faces growing risks. One of the biggest factors clouding its medium-term outlook is U.S.–China trade policy. According to a Reuters report last week, the Trump administration is considering new export restrictions on products made using U.S. software, potentially expanding trade limits far beyond the semiconductor sector. Such measures could affect NVIDIA directly, as China accounts for roughly 20–25% of its revenue. If these restrictions are enacted, NVIDIA’s high-end chips like H200 and L20 could face barriers in supplying Chinese cloud giants such as Alibaba, Baidu, and Tencent.
Each time new chip-export controls are announced, NVDA shares tend to react sharply. In the past three instances — October 2023, August 2024, and October 2025 — the stock fell between 4% and 6% in the short term before eventually rebounding.
However, the issue extends beyond lost revenue from China. NVIDIA’s dependence on the Asian supply chain — especially on TSMC in Taiwan — leaves it vulnerable to geopolitical risks. Moreover, any retaliatory measures from Beijing, such as tariffs or restrictions on rare-earth exports, could drive up production costs and pressure margins.
To mitigate these risks, NVIDIA has been actively diversifying its supply chain, partnering with manufacturers in Malaysia, Vietnam, and India to shift component production and assembly away from China. This strategy helps reduce political exposure but comes with transitional costs that may temporarily weigh on profitability. According to Citi Research, if the U.S. enacts additional export controls, NVIDIA’s earnings per share (EPS) could decline by 8–12% in the next fiscal year. Still, this dip may be gradually offset by rising demand from the U.S., Europe, and India, where massive “sovereign AI” infrastructure initiatives worth hundreds of billions of dollars are being rolled out.
From a valuation standpoint, NVDA is currently trading around $182 per share, implying a forward P/E ratio of about 40×. Although this is high compared with the broader market, most analysts view it as reasonable given the company’s expected 40–45% annual earnings growth through 2027. Major investment banks such as Goldman Sachs, Morgan Stanley, and Bank of America maintain a “Buy” rating, with 12-month price targets in the $210–$230 range.
In the long term, NVIDIA’s outlook remains highly positive. Global demand for AI computing, simulation, and data processing continues to grow exponentially. National AI projects, autonomous-vehicle investments, and edge-computing infrastructure all open new growth cycles. Furthermore, NVIDIA benefits from an “exclusive ecosystem” — a unique integration of hardware and software that no competitor can easily replicate.
Nonetheless, in the short term, the escalating U.S.–China trade friction will continue to pose risks. Any expansion of export restrictions or retaliatory tariffs could weigh on the stock. Still, these risks appear temporary rather than structural, and the market will likely await policy clarity before repricing. In the broader picture, NVIDIA’s technological edge, innovation speed, and global AI demand remain strong enough to support its long-term bullish trend.
In essence, NVIDIA stands at the intersection of two powerful forces: on one side, the technological momentum and global AI revolution; on the other, the political friction and fragmentation of world trade. While the latter may constrain its short-term trajectory, the long-term outlook for NVDA remains decidedly constructive.
