Trump's 15% China cut may not worry Nvidia much

President Donald Trump's move to extract a 15% sales tax from Nvidia on certain semiconductors sold in China did nothing to damp investor enthusiasm for the world's most valuable company.

A look at balance-sheet math goes a long way to explaining why. In the first quarter, Nvidia said it sold $5.5 billion in products to China, roughly 13% of its total. The chips exposed to the Trump tax accounted for about 80% of that, or just under $5 billion.

That means the Santa Clara, California-based firm could send some $700 million per quarter to the Treasury-hardly chump change. But for a company that churns out $20 billion in profit a quarter and increases sales by a similar amount-a rate of growth it's sustained throughout the AI boom-paying the tax barely registers.

"I don't think it's that big of an issue," said Larry Tentarelli, founder of Blue Chip Daily. "If it was their overall revenue base, it would be a big problem. But because China is not the biggest proportion of their revenues, it's a speed bump."

Nvidia shares slipped Monday after the tax was disclosed, then rallied to a fresh record Tuesday in a broad market advance. The chipmaker's shares have doubled since early April, pushing its market value past $4.4 trillion. Similarly, AMD, which agreed to the same tax, closed at the highest in more than a year on Wednesday, bringing year-to-date gains to 53%.

Nvidia reports second quarter earnings on Aug. 27. Analysts expect it will report earnings growth of 44% on a 53% surge in revenue to $45.9 billion.

That's not to say the clouds have completely lifted in China. It reported this week that Beijing has encouraged local firms to avoid using Nvidia's chips-a move that could limit sales.