Semiconductor major Nvidia (NVDA) is seeing massive demand for its H20 artificial intelligence (AI) chips from Chinese companies on the rising popularity of DeepSeek’s AI models. The news was first reported by Reuters, citing people familiar with the matter. Nvidia’s H20 chips are designed specifically for export to China and are compliant with the U.S. export control requirements. The report also added that analysts are predicting Nvidia could have sold around one million H20 chips in 2024, generating over $12 billion in revenue.
DeepSeek’s Low-Cost AI Models See Surging Demand in China
Chinese tech giants, including Alibaba (BABA), Tencent Holdings (TCEHY), and ByteDance are reportedly ordering a large number of the H20 chips to suffice the growing demand for their offerings. These major Chinese players are using the AI chips for both their internal cloud computing needs and for allowing customers access to AI models.
The report also noted that smaller companies from the healthcare and education sectors have started leveraging DeepSeek’s low-cost AI models. The smaller players are now installing AI servers that have DeepSeek models and are fitted with Nvidia’s H20 chips. Thus, leading to an even greater demand for Nvidia’s chips. Earlier, only larger companies from the financial and telecommunications sector were using such AI servers for their high-power data center infrastructure.
In 2022, the U.S. put a ban on the export of Nvidia’s advanced chips to China. The administration tightened the restrictions further in 2023, fearing their misuse in military warfare. Following such orders, Nvidia custom-designed AI chips such as the H20 for exports to China, since the mainland remains one of the largest markets for its products.
Is Nvidia a Good Stock to Buy Now?
NVDA is set to release its Q4FY25 results tomorrow, after the market closes. Nvidia stock price prediction is largely dependent on how the company performs in the quarter and its expectations for the future. The Street expects Nvidia to report earnings per share (EPS) of $0.85 on revenues of $38.08 billion, according to TipRanks financial forecast data.
Ahead of the earnings, NVDA stock commands a Strong Buy consensus rating based on 31 Buys and two Hold ratings on TipRanks. Also, the average Nvidia price target of $178.81 implies 37.3% upside potential from current levels. In the past year, NVDA stock price has gained 64.8%.
