Midweek Deep Dive: ⚡ Nvidia Just Reopened Its Most Profitable Pipeline

🌞 Good Morning, Folks!

Nvidia just got permission to resume chip sales to China — and the market barely blinked. That’s odd. For months, we were told that China was off the table. That U.S. export restrictions were ironclad. That AI’s future would be built without the world’s second-largest economy. And now? Washington quietly greenlights the H20 chip, Nvidia boots up the pipeline, and most investors are still trading as if nothing changed.

This doesn’t add up — and that’s the opportunity.

In this week’s issue, I’m pulling apart what really happened beneath the surface of this story. Because while the headlines focus on compliance and policy, Nvidia just reopened a backdoor to billions in revenue. A workaround that few investors even understand — let alone know how to price in. This isn’t just about Nvidia, either. It’s about how edge gets created when markets misprice constraints as dead ends.

We’ll dive into the misunderstood return of H20 chip shipments to China, and why this “neutered” product might become the most strategically important chip on the planet. I’ll show you how Nvidia turned a geopolitical handicap into an asymmetric setup — and what you should be watching before the market catches on.

Most people are still arguing about whether AI is a bubble. Meanwhile, Nvidia is using regulation as leverage and rebuilding its China business under a new name.

This isn’t about chasing hype. It’s about spotting what everyone else missed — and positioning for what happens next. Let’s get into it.

🌐 From Around the Web

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💣 Dimon’s Fed Warning: Stop Playing With Fire 
JPMorgan CEO Jamie Dimon isn’t mincing words — he’s warning that traders are underestimating the Fed again. With pressure mounting on Powell and inflation still sticky, this is a sharp reality check for anyone betting too heavily on September cuts. When Dimon talks macro risk, I listen.

📊 CPI Cools in June — But Not Enough 
June’s inflation print came in softer, and markets rallied on cue. But core inflation remains stubborn — and Powell’s focus isn’t just CPI, it’s credibility. This report may have calmed nerves temporarily, but the Fed’s next move could still catch the crowd flat-footed.

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🔍 This Week’s Focus: Nvidia’s $20B Comeback - How Jensen Huang Just Turned a Geopolitical Disaster Into an AI Revenue Engine

The Street panicked. Wall Street bailed. Retail dumped.

But Nvidia didn’t flinch.

In fact, while everyone was obsessing over how U.S. export bans would shut Nvidia out of China’s $50B AI race, Jensen Huang was doing what great founders do best — playing the long game with an unshakable conviction and a bag of regulatory tricks.

This week, Nvidia made its move.

They’re officially resuming shipments of their H20 AI chips to China — with the U.S. government’s blessing.

And let me tell you right now: This isn’t just a press release. This is a $15–20 billion unlock Wall Street didn’t see coming.

🧨 Why This Matters Now

For nearly a year, the dominant narrative was simple:

After all, the U.S. Commerce Department slapped export restrictions on cutting-edge GPUs like the A100 and H100 in 2023 and again in late 2024, citing national security. That wiped out a chunk of Nvidia’s Chinese cloud revenue. The stock wobbled, guidance was trimmed, and the bears smelled blood.

But behind the scenes, Nvidia wasn’t crying. It was engineering a comeback — not just technically, but geopolitically.

Here’s what just happened:

• On July 15th, Nvidia confirmed it had received U.S. export licenses for its H20 chips, specially designed for the Chinese market to remain compliant with trade rules.

• These aren’t A100s or H100s — but make no mistake: they’re still extremely capable AI accelerators, far superior to what China’s domestic chipmakers like Huawei or SMIC can produce at scale.

• Huang himself traveled to Beijing after key meetings in Washington D.C. — positioning Nvidia not as a security threat, but as a gatekeeper of American AI innovation.

The result?
Chinese cloud giants like Alibaba, Tencent, and Baidu are now rushing to reorder H20 chips in bulk. Initial reports suggest demand is "very strong" and shipments will begin as early as Q3 2025.

Let me be blunt.

This isn’t just business continuity.

It’s business expansion under a new disguise.

💸 The Numbers That Wall Street’s Still Sleeping On

Let’s get surgical. Because the numbers here aren’t being priced in yet — and that’s your edge.

• 💰 $4.5 billion: That’s the write-down Nvidia took in late 2024 due to chips made for China that they couldn’t ship. That inventory? It’s now being reactivated for H20 sales.

• 🚀 $15–20 billion: Forecasted revenue Nvidia could generate from China in 2025–2026 under the new H20 export license. (Source: Bloomberg estimates, internal supply chain projections.)

• 📈 China accounted for ~17% of Nvidia’s total revenue in fiscal 2024 — roughly $17B. Even halving that figure still keeps Nvidia’s China sales at strategic scale.

• 🏗️ TSMC and packaging partners in Taiwan have already restarted backend production for H20 volume shipments. Channel checks from Asia confirm a Q3 ramp.

• 📉 Consensus models from most Wall Street analysts still reflect only $1–2B in China revenue — meaning a massive guidance beat is on deck if these orders materialize.

Now you see the setup.

🔍 Where I Stand

Let me get personal for a second.

I sold Nvidia too early in 2023. Like many others, I feared the political crossfire would cripple their China exposure. After all, how can a company grow if it’s banned from its second-largest market?

But that’s the mistake: I underestimated the playbook of a founder-led company that knows how to work the system.

This is what I’ve learned the hard way:

• Great companies don’t wait for policy to change — they engineer around it.

• The media reports bans. Real operators find backdoors.

• The market trades headlines. Investors trade edge.

And this is edge.

H20 is not a placeholder. It’s a revenue Trojan horse.

It lets Nvidia say: “We’re compliant.”
While simultaneously shipping billions of dollars of compute to a country that’s still desperate to build its own version of ChatGPT, Gemini, and Copilot.

And most investors? Still think NVDA is off the table in China.

🧠 Why This Isn’t Just Another Earnings Beat

This is structural alpha.

AI adoption in China hasn’t slowed down. The government is pushing full steam ahead with digital infrastructure, sovereign LLMs, and smart factories. That requires AI compute — and China doesn’t have the hardware to match.

Yes, Huawei is working on the Ascend AI chip. SMIC is fabricating limited quantities of 7nm nodes. But there’s a catch:

• Performance isn’t close to Nvidia’s.

• Software stack is broken (no CUDA alternative).

• Volume scaling is years away.

So here’s the reality:

Even a “weaker” Nvidia chip is still the best option available to Chinese hyperscalers.

📈 What I’m Tracking Next (Setup)

If you’re serious about positioning, here’s what you should have on your radar:

1. H20 Shipment Confirmation

💡 Validation trigger
If Alibaba or Baidu confirm Q3 receipt of H20 shipments during earnings, we’ll see a major repricing event. I’m watching their next ER calls closely.

2. NVDA’s August Earnings Guidance

💡 Catalyst window
Look for Huang to explicitly highlight China revenue expectations. If that $3–5B is included in guidance, the stock could rerate.

3. Margin Watch

⚠️ Risk trigger
Are H20 margins meaningfully lower than A100s? I’ll be checking for any erosion in data center gross margins.

4. Geopolitical Whiplash

⚠️ Black swan risk
Any new regulatory retaliation from China (e.g., rare earth restrictions) or a U.S. clampdown on even “compliant” chips could shift sentiment again.

🧠 Final Thought: Play the Player, Not the Game

Most people are trying to figure out if Nvidia’s chips are good enough for China.

Wrong question.

The real question is: How did Nvidia manage to keep China in play — and still stay in America’s good graces?

That’s not tech.

That’s elite-level positioning.

And positioning, not perfection, is how the best investors win over time.

If you only read headlines, you missed it.
If you watched what Jensen Huang did instead of what he said — you caught the signal.

And the signal is clear:

Nvidia just re-opened a $20B pipeline, under the radar, in the world’s second-largest AI market.

🧠 Final Word

There’s a strange tension in the market right now. Retail is jumpy. Institutions are conflicted. Every headline seems to contradict the last — rate cuts are back on the table, but inflation isn’t done. The S&P is near all-time highs, yet under the surface, breadth is narrowing, and leadership is shifting fast. And let’s be honest: most people are just guessing — jumping between trades, headlines, and sentiment without a clear framework. It’s loud. It’s messy. And it’s built to shake you out of your position.

But this is where conviction matters most. You don’t need to predict every move — you just need to understand the deeper game. Nvidia's move in China? That wasn’t luck. It was positioning. While the crowd was focused on the ban, Huang was building the workaround. The same principle applies across this market. When it feels uncertain, zoom out. What are the players with real edge doing? Follow those moves — not the mood of the crowd.

I’ve lived through enough of these cycles to know: this kind of chaos is opportunity in disguise. The edge isn’t in reacting louder or faster. It’s in staying grounded while others lose the plot. Keep your clarity lens clean, your playbook simple, and your positioning sharp. The noise will pass. The market always gives back — but only to those still standing when the dust clears.