NVIDIA Corporation (NASDAQ:NVDA) may be allowed to sell part of its chip range in China again. Officials there have asked ByteDance and Alibaba Group Holding Limited (NYSE:BABA) to report their plans for buying its RTX PRO 5500 processors, according to The Information.
Governments ask for purchase plans for one reason. They are deciding whether to permit the purchases. Neither government has confirmed anything, and the report describes deliberations rather than a decision. Chinese chipmaking shares fell on it regardless. Nvidia closed at $225.07, up 0.22%, and is worth roughly $5.4 trillion.
READ ALSO: Alibaba Just Unveiled an AI Chip 3x Faster Than Its Predecessor. Nvidia Has a China Problem to Watch
China Has Spent Two Years Trying Not to Need Nvidia:
The significance lies in who would be buying. ByteDance and Alibaba are two of the largest purchasers of computing capacity in China, and Beijing has spent two years steering them toward domestic silicon instead.
That policy has produced results. Alibaba unveiled its own accelerator this month, running roughly three times faster than the chip it replaced. Chinese firms have been designing around Nvidia rather than waiting for export rules to loosen, and several are now shipping silicon they did not have two years ago.
Permitting these purchases would be an admission that the domestic alternatives are not yet close enough. For Nvidia, a market it had largely written off would partially reopen, and it would do so without the company having to win any new argument in Washington.
The scale matters too. Nvidia turned over about $302.97 billion over the past year and is worth roughly $5.45 trillion. China was once a substantial slice of that and has effectively been zero, so any return is incremental revenue against a base that already assumes none.
That is why the stock barely moved. Nvidia trades near 28 times trailing earnings, modest for a business this size, and current forecasts assume little or no China revenue. Approval would be upside rather than something the price depends on.
DON’T MISS: Alibaba (BABA)’s AI Bet Faces a $10.2 Billion Test
Two Governments Have to Agree, and Neither Has:
The obvious problem is that this is one half of a permission that requires two. Beijing allowing its companies to buy does nothing unless Washington allows Nvidia to sell. American lawmakers are currently pushing in the opposite direction, working to keep Chinese data center technology out of sensitive government systems. Export policy has tightened repeatedly and shows no sign of reversing.
There is a commercial catch as well. Chinese chipmaking shares fell on the report. One reading is that a reopened Nvidia channel would cost domestic suppliers, and Beijing has spent two years building those suppliers up.
So the decision is not only about access to better silicon. It is about whether China is willing to slow its own substitution program to get it, which is a political question rather than a commercial one.
Conclusion:
Strip out the speculation and one asymmetry survives. Nvidia’s forecasts assume close to nothing from China, so approval would add revenue nobody is currently paying for, while refusal costs the company nothing it has not already written off. The risk sits almost entirely with the other parties. Beijing would be conceding that two years of encouraging domestic substitution has failed to close the gap. Its own chipmakers would lose a protected customer base, which is why their shares fell rather than rose. Washington has agreed to nothing and is moving the other way. For Nvidia, this is a free option. For everyone else in the story, it is a decision that costs something.
Market Sentiment:
NVIDIA Corporation was held by 285 hedge funds with a combined stake value of about $94.7 billion at the end of Q2 2026 in the Insider Monkey database, up from 275 holders in the previous quarter. Alibaba Group Holding Limited was held by 97 hedge funds with a combined stake value of about $2.7 billion, down from 102 holders in the previous quarter.
READ NEXT: Circle (CRCL) Loses its CFO and a Co-Founder on the Same Day and Deckers (DECK) vs Crocs (CROX): Which is a Better Stock to Buy?
This article is originally published at Insider Monkey.
