“NVIDIA’s biggest bottleneck isn’t silicon, it’s diplomacy”
QUOTED EXCERPT
“NVIDIA’s biggest bottleneck isn’t silicon, it’s diplomacy,” said Michael Ashley Schulman, chief investment officer at Running Point Capital. He added that Nvidia’s growth curve was “still impressive, but not as exponential.”
“Nvidia still growing, but China uncertainty clouds outlook”—article by Stephen Nellis, Max A. Cherney, and Arsheeya Bajwa—Reuters reached out to us for commentary after the world’s largest public comapny, NVIDIA, posted earings last week.
ADDITIONAL THOUGHTS
Paying Uncle Sam 15% for the privilege of selling to China feels less like a license and more like a geopolitical subscription service; less like free trade and more like a geopolitical toll road. Nvidia’s margins may be fat, but Uncle Sam just slapped on a congestion charge for crossing the Pacific. Critics are all over this, calling it a constitutional stretch and a slippery slope for future trade policy.
Turns out transistors are easier to align than Washington and Beijing. China telling firms to resist Nvidia chips is like telling kids to eat less sugar; it sounds resolute, until you see what’s actually in the shopping cart🛒
The bigger risk is how long Beijing is willing to play chicken with its own AI ambitions. Nvidia’s growth curve is still impressive, but not as exponential and with more political calculus. The irony is that H20 was supposed to be a workaround, and now it’s running out of oxygen with no 2nd quarter sales to China and Nvidia having instructed suppliers like TSMC, Samsung Semiconductor, and Amkor Technology, Inc. to stop H20 production🏭
In a bid to maintain China access, Nvidia is developing a new Blackwell‑based chip (B30/B30A) for China, trading a bit of performance for a lot of regulatory goodwill. It should be about 80% as powerful as the standard Blackwell GPU, but still more advanced and export‑friendly than H20. The B30/B30A chip is Nvidia’s diplomatic olive branch; less juice, but a way to keep the relationship going🕊️
While growth has cooled from last year’s triple-digit pace, the AI demand, especially from hyperscalers (ginormous data centers) and sovereign-backed demand, is still scorching. Q2 earnings are testing whether Nvidia can juggle all the political turmoil and bleeding edge lead while keeping investors gleaming amid fears of an AI boom-bubble or even just trepidations of a levelling off in demand📊
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