Key Points
Nvidia became the first company to surpass a market cap of $4 trillion.
The company announced it would resume selling its H20 chips to China.
Despite a significant opportunity, the stock remains attractively priced.
10 stocks we like better than Nvidia ›
Shares of Nvidia (NASDAQ: NVDA) surged in July, jumping 12.6%, according to data supplied by S&P Global Market Intelligence.
The catalysts that sent the semiconductor specialist higher were ongoing developments in the field of artificial intelligence (AI) and a new benchmark for the stock.
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Nvidia’s GB200 Grace Blackwell Superchip. Image source: Nvidia.
First $4 trillion company
Nvidia made history last month by becoming the first company with a market cap of $4 trillion. This move cemented Nvidia’s position as the world’s most valuable company, beating out other tech heavyweights, including Microsoft and Apple. Nvidia has become the poster child for the accelerating adoption of AI, as its graphics processing units (GPUs) underpin the technology.
Another big development helped propel the stock higher. In a blog post published on July 14, Nvidia CEO Jensen Huang announced the company would resume sales of H20 chips to customers in China after a three-month moratorium. After the ban was issued in early April, Nvidia had taken a $4.5 billion charge related to these H20 chips. The charge combined with the $4.6 billion in quarterly sales that had already occurred suggested there was more than $9 billion in quarterly revenue at stake.
In the wake of this announcement, several Wall Street analysts issued bullish takes on the chipmaker, citing the resumption of sales in this important market.
More to come
Nvidia is scheduled to report the results of its fiscal 2026 second quarter after the market close on Aug. 27, and investors are likely in for a pleasant surprise. Management was guiding for revenue of about $45 billion, which would represent growth of 50%, but that was before the company resumed chip sales to China. Nvidia had a limited supply of its H20 chips in stock, so the full impact of the easing of import restrictions likely won’t be felt until Q3. Furthermore, Nvidia has a history of issuing conservative guidance, so the results will likely be higher than its forecast.
Finally, Nvidia controls about 90% of the data center GPU market, and spending by big tech on capital expenditure (capex) to support AI continues at a brisk pace. At the same time, Nvidia is selling for just 31 times next year’s earnings, an attractive price for a company with so much opportunity.
That’s why Nvidia stock is a buy.
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Danny Vena has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
