Nvidia’s (NVDA) business in China has been largely eliminated by America’s export restrictions, Morningstar Equity Strategist Brian Colello told Yahoo Finance recently.
As a result, the giant chip maker is likely to completely abandon the world’s second-largest economy, he stated.
The Last Straw
Washington ‘s decision to prevent Nvidia (NVDA) from selling its H20 chip in China “was probably the final straw” for NVDA’s ability to market “halfway decent chips” in the country, Colello said.
As a consequence, he believes that China-based Huawei can now sell higher-quality chips than NVDA in China or will soon be able to do so.
NVDA Disputes Colello’s View In an email to Insider Monkey on May 1, NVDA wrote “NVIDIA has never said it would walk away from China. ” In the past, NVDA has stated that it ” would need to get a license for selling product to China under US regulations,” the company pointed out. The latter statement does “not “mean or imply” that it “would walk away,” the chip maker added. NVDA called Colello’s belief that it would abandon China a ” big leap.”
The Silver Lining for NVDA
The percentage of revenue that Nvidia (NVDA) obtains from China has already dropped, Colello said. Moreover, the company can still grow significantly even though it will only focus on the U.S. and Europe going forward, he said.
The Recent Price Action of NVDA Stock
In the last month, the shares have lost 3.5%, while they have retreated 14% in the last three months.
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Disclosure: None. This article is originally published at Insider Monkey
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