Jensen Huang Admitted Nvidia's China Revenue Has Fallen to Zero. Here Is His $20 Billion Comeback Plan.

Semiconductor chip export restrictions to China have cost Nvidia (NASDAQ: NVDA) billions in revenue. In a recent interview, CEO Jensen Huang admitted that Nvidia's chip market share in China has been wiped out. Speaking about Nvidia's share of the artificial intelligence (AI) chip market, Huang said, "Nvidia had ... 90-some-odd percent of the world's market share. Today in China, we have now dropped to zero."

China is a large and important market for Nvidia, but in the near term, the company hasn't missed a beat. Its new Vera central processing unit (CPU) is opening up a $200 billion addressable market that completely dwarfs its previous chip revenue in China.

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Vera CPU revenue expected to hit nearly $20 billion

Last year, the company earned nearly $20 billion in revenue from China (9% of its total revenue), but that revenue fell by roughly half year over year in the fiscal first quarter to approximately $4.5 billion. Huang's comment suggests revenue has continued to collapse since the end of the quarter. While the U.S. has approved some licenses for the H200 chip in China, Nvidia has yet to earn any revenue from it and has not included any China data center sales in its forward guidance.

However, Nvidia is never sitting still. Its steady cadence of product releases is one of its competitive strengths. The GPU leader is now a leader in CPUs as well. During the last earnings call in May, management noted that it expects nearly $20 billion in CPU revenue this year. This completely replaces last year's revenue from China.

Nvidia is set for another record year

By expanding into the CPU market, Nvidia is entering a space that Intel and Advanced Micro Devices have dominated for decades. AI demand has made the semiconductor competitive landscape more crowded, but Nvidia is differentiating itself by integrating Vera CPUs into a computing system that includes networking, accelerated-computing racks, and GPUs. This kind of innovation is a big reason Nvidia's data center business nearly doubled again in the first quarter, with segment revenue reaching $75 billion.

The Vera Rubin computing platform is designed for advanced reasoning and multiple-step problem-solving to power agentic AI. It features seven purpose-built chips to deliver up to 35x higher inference throughput. It should drive significant revenue when it starts shipping later this year.

Analysts currently expect Nvidia's full-year revenue to increase 81% from last year to $391 billion. That should translate to $8.96 in earnings per share based on the consensus estimate.

Given the uncertainty around government regulations in chip exports, it's unclear when Nvidia will recover its business in China. But for now, the growth opportunity from Vera CPUs is not priced into the stock's valuation, which is 22 times this year's earnings estimate. That looks very cheap relative to Wall Street's earnings growth estimates for the next few years, which currently sit around 45% annualized.

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool has a disclosure policy.