The thesis

NVIDIA sells the GPUs that hyperscaler AI spending flows through, and its data centre segment carried fiscal 2025 revenue. Revenue grew 105.8% year over year, gross margin sits at 74.7%, and net margin reaches 63.7%. Analysts rate the stock a consensus buy at 26.7x earnings, a modest multiple for that growth rate. Our conviction score is only 53 of 100 because export controls and custom ASIC competition contradict the clean bull case.

Why now

Chinese tech giants ordered $35 billion of compliant NVIDIA chips, directly testing how much restricted demand converts into revenue. Meanwhile China's export restrictions on indium processing remind the market that the supply chain itself is a policy variable, so the trade backdrop is shifting faster than the consensus narrative.

What to watch

Data centre revenue sequencing and gross margin movement over the next two quarters, which will show whether compliant China chips actually ship at the ordered $35 billion scale. Any new accelerator export restriction, plus hyperscaler capex commentary and custom silicon win rates, will confirm or deny the durability of NVIDIA's share of AI spend.

Key risks

Export controls can truncate the China order book again after compliance criteria change. Custom ASICs and AMD pressure the accelerator market where NVIDIA's 74.7% gross margin implies pricing power that competition may erode. A pause in hyperscaler AI capex would cut the primary revenue driver.

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