NVIDIA: H200 China OK, Q3 $57B Boosts Stock Rally!

NVIDIA: H200 China OK, Q3 $57B Boosts Stock Rally!

This past week delivered a string of tangible events that directly affect NVIDIA (NVDA): U.S. regulatory approval to sell H200 AI processors to vetted Chinese customers (subject to a 25% levy), record Q3 FY2026 financials driven by compute & networking, strengthened cloud partnerships emphasizing high‑bandwidth interconnects, and visible competitive pressure from Broadcom‑backed TPU deployments. Each development has concrete, near‑term implications for revenue, margins, and investor sentiment.

What changed this week

U.S. clears H200 exports to China with conditions

On December 9, 2025, regulators permitted sales of NVIDIA’s H200 AI processors to approved buyers in China, while imposing a 25% levy on those transactions. The move reopens an addressable revenue channel that had been restricted, but it is not an unrestricted restart: approvals, compliance steps, and the levy limit the immediate upside. The market reaction was measurable—NVDA ticked higher in premarket trading, reflecting investor recognition that compute sales to China can now resume under controlled terms.

Q3 FY2026: record revenue, compute & networking dominance

NVIDIA reported blockbuster Q3 FY2026 results with $57.0 billion in revenue, up sharply year‑over‑year. The Compute & Networking segment produced roughly $50.91 billion—about 89% of total revenue—while Graphics (including gaming GPUs) contributed roughly $6.1 billion (≈11%). Management’s guidance pointed to even stronger Q4 revenue expectations (~$65 billion) and a targeted non‑GAAP gross margin near 75%. These figures make the company’s dependency on data center compute and networking explicit and explain the market’s bullishness on persistent enterprise AI demand.

Key strategic and competitive developments

Rubin GPUs and memory choices

NVIDIA is advancing its Rubin family and moving to cost‑effective GDDR7 memory for certain configurations—steps intended to preserve performance leadership while improving price/performance against alternatives. Those architectural and supply decisions matter because they shape how NVIDIA defends margin and share if cloud providers or hyperscalers pursue TPU‑centric deployments.

Broadcom/TPU competition

Broadcom’s moves to support TPU deployments, and the market’s attention to Broadcom’s earnings commentary, present a clear competitive dynamic—not speculation. TPUs targeted at large AI workloads can displace some GPU demand in select use cases; that pressure is real and being monitored by investors, but it’s counterbalanced by NVIDIA’s entrenched software stack, ecosystem integrations, and broad product portfolio.

AWS, NVLink Fusion and networking momentum

Cloud partnerships surfaced this week as another concrete tailwind. AWS interest in interconnect technologies like NVLink Fusion and the spotlight from major financial institutions signal growing traction for NVIDIA’s networking stack. High‑bandwidth GPU interconnects are increasingly differentiated components of AI infrastructure purchases, translating into meaningful revenue potential beyond raw GPU sales.

How these events affect NVDA stock

Taken together, the week’s developments create a mix of measurable upside and identifiable headwinds:

• Near‑term revenue expansion: H200 approvals for approved Chinese buyers reopen a previously restricted revenue path. The 25% levy tempers but does not eliminate the benefit.
• Financial validation: Record Q3 results and optimistic Q4 guidance reinforce confidence in persistent data center demand and justify higher valuation multiples tied to profitable AI growth.
• Competitive vigilance: TPU and Broadcom progress remain tangible risks for specific workloads and customers, pressuring share in targeted segments.
• Networking as a differentiator: NVLink Fusion and cloud partnerships strengthen NVIDIA’s position in end‑to‑end AI stacks—an advantage that supports margin sustainability.

Conclusion

This week’s concrete events—H200 export approvals to approved Chinese buyers (with a 25% levy), record Q3 FY2026 results driven by compute & networking, AWS‑adjacent interconnect engagement, and visible TPU competition—collectively sharpen the investment thesis for NVIDIA. The company’s revenue runway in China and dominant data center performance are clear, measurable drivers, while competitive and regulatory nuances define the scope and timing of the upside. For investors, these are actionable data points rather than abstract signals: they change revenue flow, margin outlook, and competitive posture in ways that can be tracked quarter to quarter.

Data referenced: H200 China export approval (Dec 9, 2025) with 25% levy; Q3 FY2026 revenue $57.0B; Compute & Networking ≈ $50.91B; Graphics ≈ $6.1B; Q4 revenue guidance ≈ $65B and target non‑GAAP gross margin ≈ 75%.