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A Reuters report claims that Nvidia could start shipping H200 chips to China from mid-February.
The company is expected to increase its capacity to fulfill more orders from Chinese customers.
Analysts expect Nvidia to deliver respectable gains in 2026, but the company could potentially do even better based on the latest developments.
Nvidia's (NASDAQ: NVDA) gains on the stock market this year may not have been as great as in 2023 and 2024. However, the semiconductor bellwether still managed to clock respectable gains of 37% despite being under pressure at certain times owing to various factors.
Nvidia stock outperformed the tech-focused Nasdaq Composite's 21% jump by a nice margin. And now, the chip designer is entering the new year with a potentially solid tailwind on its side. President Donald Trump announced earlier in December that Nvidia will be allowed to sell its advanced H200 data center graphics processing units (GPUs) to approved Chinese customers. It looks like the wheels are already in motion, and Nvidia will soon be able to tap the Chinese market once again, according to an exclusive Reuters report.
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Let's take a closer look at this news, and check why it is going to be a big boost for this semiconductor stock in the new year.
Image source: Nvidia.
Reuters spoke to three people familiar with Nvidia's Chinese plans. The news agency learned that Nvidia informed its Chinese customers that it plans to start shipping the H200 processors before the mid-February Lunar New Year holiday.
The Reuters report claims Nvidia will initially ship between 40,000 and 80,000 H200 chips. Nvidia will fulfill these shipments from its existing H200 stock. Given that each H200 processor is priced at around $32,000, Nvidia could sell $1.28 billion to $2.56 billion worth of these chips into the Chinese market in the first quarter of fiscal 2027, which begins at the end of January 2026.
Of course, Nvidia's agreement with the Trump administration is that it will hand over a quarter of its Chinese revenue to the U.S. government. However, it is still a start, nonetheless, for a company that was frozen out of this market in April 2025 following export controls restricting sales of its advanced AI chips to Chinese customers. More importantly, the third source cited by Reuters in its report stated that Nvidia will bring additional production capacity online for its Chinese customers.
The company will start taking orders for the newly added capacity in the second quarter of 2026. This suggests Nvidia is confident regarding the demand for the H200 processors in China. That isn't surprising, as the H200 is around six times more powerful compared to the China-specific H20 processor it was selling there earlier. So, it is easy to see why Chinese tech giants Alibaba, ByteDance, and Tencent are looking to get their hands on these chips.
Another point of note is that Chinese government officials may mandate companies to purchase homegrown chips, along with the H200, to support the growth of local technology. This could further reduce the friction for Nvidia to sell its advanced chips in China, a market where it was on track to sell $30 billion worth of AI chips in the current fiscal year before the restrictions kicked in.
Nvidia already has a significant backlog of data center chip orders to fulfill in 2026, standing at around $275 billion. That number is now likely to head higher following the reopening of its access to the Chinese market, which could pave the way for a stronger jump in its revenue and earnings.
Nvidia has a 12-month median price target of $250, per 69 analysts covering the stock. That suggests a potential jump of 36% from current levels, almost in line with the stock's appreciation this year. However, the recent developments have led analysts to boost their earnings expectations from Nvidia in 2026.
Data by YCharts.
The current $7.52 earnings per share estimate for next year points toward a potential 60% increase from the ongoing fiscal year's estimated earnings of $4.69 per share. However, those estimates can increase once the additional business that Nvidia is likely to receive from China is factored in, paving the way for a bigger jump in this AI stock in 2026 compared to what it delivered this year.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.
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