Nvidia shares came under pressure following reports that China is requiring state-backed data centers to use only domestic AI chips, while ByteDance – TikTok’s parent company and one of Nvidia’s key clients in the region – was instructed to abandon the use of the American manufacturer’s GPUs. This intensified concerns about a further decline in Chinese revenue, which historically accounted for around 13% of the company’s turnover.

At the same time, the pressure coming from China affects the entire sector: AMD, ASML, and Synopsys previously noted a drop in revenue from China and excluded it from their guidance. The market had already priced this risk in, so the latest developments are seen as the realization of an expected scenario rather than a new shock for valuation.

Fundamentally, Nvidia remains strong: it continues to lead the AI GPU market, and its recent quarterly results showed revenue and profit beating expectations, along with an optimistic outlook. Management emphasizes that the company earns not only from training AI models but also from inference and deployment, and will continue balancing buybacks with heavy R&D investment.

The recent correction pushed Nvidia’s valuation multiples well below their five-year averages, while expected EPS growth remains at strong double-digit levels. Analyst consensus still points to a “strong buy,” and China-related restrictions are viewed as a risk largely priced in amid long-term demand for AI infrastructure.