Nvidia, AMD’s China AI chip sales deal with US a bullish sign for AI related tech stocks: Wedbush

Wedbush said a reported U.S. deal to allow Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) to secure export licenses to sell their AI chips in China in exchange for a 15% cut of the profits, “takes down a key barrier of growth in the AI Revolution and is another bullish sign for AI related tech stocks heading into the next 12 to 18 months.”

Nvidia (NASDAQ:NVDA), reportedly, will share 15% of revenue from sales of its H20 AI accelerator in China, while AMD is expected to contribute an identical share from its MI308 chip revenues.

“While the deal itself is highly unusual and will continue to create many questions in the tech/legal community, the end result is another major growth catalyst not just for Nvidia and AMD, but the overall US Big Tech ecosystem and derivatives of the AI Revolution,” said analysts led by Daniel Ives.

The analysts added that if U.S. President Donald Trump kept the H20 chip blockade this essentially would have handed Huawei $15B per year “on a silver platter” its AI chip opportunity and would have been a major competitive advantage for Beijing and a self-inflicted wound by the U.S. government.

“In this AI Arms Race between the U.S. and China it’s a careful balance by Trump to focus on national security issues and policy while making sure we do not clip the wings of the best tech companies in the world focused on the AI Revolution,” said the analysts.

Ives and his team noted that for the first time in 30 years, they believe the U.S. is ahead of China in tech as the global AI Revolution is being led by Nvidia (NVDA), Microsoft (NASDAQ:MSFT) Palantir Technologies (NASDAQ:PLTR), OpenAI, Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google, Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), AMD and many other U.S. companies.

The analysts added that China is quickly ramping up its technology and “not sitting on a treadmill” as tech stalwarts Huawei, Alibaba (NYSE:BABA) Baidu (NASDAQ:BIDU), Tencent (OTCPK:TCEHY) (OTCPK:TCTZF), Xiaomi (OTCPK:XIACF) (OTCPK:XIACY) and others are aggressively looking to accelerate its AI technology ambitions.

“The one major problem for China (and the Trump Administration knows this very well) is there is one chip in the world fueling the AI Revolution and it’s Nvidia. Globally as more sovereigns, enterprises, and consumers head down the AI path over the next few years there will be trillions of dollars up for grabs and right now that is heavily favored to go to US Big Tech,” said Ives and his team.

The analysts noted that Middle East is a perfect example of this as Saudi Arabia, United Arab Emirates, or UAE, and other countries build out their AI strategies and infrastructure it will be led by Nvidia, Microsoft, Google, Palantir, AMD and others on the chip, datacenter, and use cases buildouts.

“This is a global battle for market share in the 4th Industrial Revolution led by AI and US Big Tech CEOs want a major bite at the apple and paying a 15% fee to the White House is a small price to pay for access to China and other key markets around the world,” Ives and his team added.