Nvidia (NVDA) continues to dominate the global AI chip market, but new signals out of China suggest that the competitive landscape may be shifting. This week, reports surfaced that Huawei Technologies—widely considered China’s best hope of breaking free from reliance on U.S. semiconductors—plans to double production of its most advanced AI chips over the next year. The move underscores both Beijing’s determination to reduce dependence on U.S. technology and Huawei’s growing role in the domestic semiconductor race.
So, where does this leave investors? With NVDA stock continuing to notch record highs, how much weight should investors place on Huawei’s “warning”—and what’s the best move with the stock right now? Let’s take a closer look.
Nvidia is a premier technology firm known for its expertise in graphics processing units and artificial intelligence solutions. The company is renowned for its pioneering contributions to gaming, data centers, and AI-driven applications. NVDA’s technological solutions are developed around a platform strategy that combines hardware, systems, software, algorithms, and services to provide distinctive value. The chipmaker has a market cap of $4.53 trillion, making it the most valuable company in the world.
Shares of the AI darling have rallied 38% on a year-to-date basis (YTD). Since my latest article on NVDA, there has been no new company-specific news driving the stock, so its gains appear to be tracking the broader market.
Huawei Technologies is reportedly planning to significantly scale up production of its most advanced AI chips over the coming year. This spike in production is an effort to meet domestic demand in China, where companies like Alibaba (BABA), Tencent (TCEHY), and DeepSeek need millions of processors to develop and run AI services. Essentially, Huawei is seeking to win customers in the world’s largest semiconductor market at a time when Nvidia is grappling with geopolitical headwinds.
Bloomberg reported on Monday that Huawei plans to produce around 600,000 of its flagship 910C Ascend chips next year, nearly twice the output expected this year. Including other models in the series, total output could reach 1.6 million chips. If Huawei achieves those targets, it would mark a technical breakthrough for a company considered China’s best hope of reducing reliance on foreign chips. The 2025 and 2026 projections include Huawei’s existing inventory of dies, along with internal estimates of production yields and failure rates, according to the report.
In September, Huawei unveiled a roadmap detailing its chip development plans through 2028 aimed at challenging Nvidia’s dominance. Rotating Chairman Eric Xu introduced a lineup of Ascend chips—the 950, 960, and 970—each built to deliver incremental performance gains. That marked a departure from tradition for the company, which had previously chosen to keep its plans and capabilities under wraps.
Notably, Huawei is expected to launch a successor to the 910C, informally referred to by the industry as the 910D, in late 2026, the report said. In September, the company announced plans to release a chip called the 950DT in late 2026, targeting production of around 100,000 units. The 950DT will feature four dies within a single chipset, representing a major design change. Huawei also introduced its UnifiedBus interconnect protocol, which allows up to 15,488 Ascend chips to be connected.
While Huawei is at the forefront of Chinese chipmakers racing to develop accelerators, Nvidia remains largely sidelined in the Chinese market due to government restrictions. Beijing has blocked or discouraged domestic use over security concerns. Nvidia CEO Jensen Huang has tried to reassure Chinese officials about the safety of his company’s products, but it remains uncertain when, or if, that will succeed. I covered this in detail in my latest article on NVDA.
CEO Huang, responding to the latest Chinese restrictions, said, “I’m disappointed with what I see, but there are broader issues that need to be resolved between China and the United States.” The company stated during its Q2 earnings call that it recorded no H20 sales in the quarter. It also expects zero AI chip sales to the country this quarter. Nvidia has been central to U.S.-China trade negotiations, which is why I don’t expect clarity on its position in China until/if a broader trade deal between the world’s two largest economies is reached.
Let’s now take a closer look at whether Huawei’s plans pose a serious competitive threat to Nvidia (assuming the latter will be able to sell its AI chips in China). Well, the upcoming Ascend 950 delivers only about 6% of the performance of Nvidia’s next-generation VR200 superchip. Of course, I doubt anyone expects Nvidia to be allowed to sell its most powerful offerings in China, but even if it produces a version with only half—or even a third—of the VR200’s performance, it would still far outpace the Ascend 950.
Another critical point is that Huawei’s major customers have primarily used its most advanced semiconductors only for inferencing. And Chinese companies have largely depended on Nvidia’s high-performance processors to train large-scale models. Of course, I cannot ignore a Bloomberg report stating that Huawei is working on a revamped next-generation Ascend chip, beyond the announced models, which could be powerful enough to train AI algorithms for major clients. However, since commercialization of that product isn’t expected until at least 2027, I don’t see much reason for concern at this stage. Moreover, The Information reported last month that Alibaba and Baidu have begun using their own internally designed chips to train AI models. The key point, however, is that those chips are used for smaller AI models, while both companies continue to rely on Nvidia chips for developing their most advanced models.
Finally, Nvidia offers a robust ecosystem that seamlessly integrates its chips with its software platform, forming what experts call a “moat.” This makes it costly and difficult for AI developers to switch to alternatives once their models are trained on Nvidia’s software. “The H20 comes with a complete ecosystem covering both hardware and software support, ensuring better compatibility and ease of integration,” said Brady Wang, associate director at Counterpoint.
Wall Street analysts remain highly optimistic about NVDA, as the stock has a top-tier consensus “Strong Buy” rating. Out of the 46 analysts covering the stock, 39 rate it a “Strong Buy,” two a “Moderate Buy,” four suggest holding, and one gives it a “Strong Sell” rating. The average price target for NVDA stock stands at $215.51, implying a 15.1% upside from current levels.
Despite the headwinds in China, Nvidia is expected to maintain strong growth momentum. Analysts project Nvidia’s adjusted EPS will climb 50.58% year-over-year (YoY) to $4.50 in fiscal 2026, while revenue is expected to rise 58.20% from the prior year to $206.45 billion.
So, what should you do with NVDA stock here? My answer remains unchanged: take advantage of any pullbacks to add more of this high-quality stock to your portfolio, as I expect it to continue outperforming the broader market in the years ahead. When it comes to China, competition from domestic players is certainly intensifying, but based on the points outlined above, I continue to believe that if/when Nvidia resumes chip sales in the country, demand for them will remain strong.
On the date of publication, Oleksandr Pylypenko had a position in: NVDA. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Nvidia (NVDA) continues to dominate the global AI chip market, but new signals out of China suggest that the competitive landscape may be shifting. This week, reports surfaced that Huawei Technologies—widely considered China’s best hope of breaking free from reliance on U.S. semiconductors—plans to double production of its most advanced AI chips over the next year. The move underscores both Beijing’s determination to reduce dependence on U.S. technology and Huawei’s growing role in the domestic semiconductor race.
So, where does this leave investors? With NVDA stock continuing to notch record highs, how much weight should investors place on Huawei’s “warning”—and what’s the best move with the stock right now? Let’s take a closer look.
Nvidia is a premier technology firm known for its expertise in graphics processing units and artificial intelligence solutions. The company is renowned for its pioneering contributions to gaming, data centers, and AI-driven applications. NVDA’s technological solutions are developed around a platform strategy that combines hardware, systems, software, algorithms, and services to provide distinctive value. The chipmaker has a market cap of $4.53 trillion, making it the most valuable company in the world.
Shares of the AI darling have rallied 38% on a year-to-date basis (YTD). Since my latest article on NVDA, there has been no new company-specific news driving the stock, so its gains appear to be tracking the broader market.
Huawei Technologies is reportedly planning to significantly scale up production of its most advanced AI chips over the coming year. This spike in production is an effort to meet domestic demand in China, where companies like Alibaba (BABA), Tencent (TCEHY), and DeepSeek need millions of processors to develop and run AI services. Essentially, Huawei is seeking to win customers in the world’s largest semiconductor market at a time when Nvidia is grappling with geopolitical headwinds.
Bloomberg reported on Monday that Huawei plans to produce around 600,000 of its flagship 910C Ascend chips next year, nearly twice the output expected this year. Including other models in the series, total output could reach 1.6 million chips. If Huawei achieves those targets, it would mark a technical breakthrough for a company considered China’s best hope of reducing reliance on foreign chips. The 2025 and 2026 projections include Huawei’s existing inventory of dies, along with internal estimates of production yields and failure rates, according to the report.
In September, Huawei unveiled a roadmap detailing its chip development plans through 2028 aimed at challenging Nvidia’s dominance. Rotating Chairman Eric Xu introduced a lineup of Ascend chips—the 950, 960, and 970—each built to deliver incremental performance gains. That marked a departure from tradition for the company, which had previously chosen to keep its plans and capabilities under wraps.
Notably, Huawei is expected to launch a successor to the 910C, informally referred to by the industry as the 910D, in late 2026, the report said. In September, the company announced plans to release a chip called the 950DT in late 2026, targeting production of around 100,000 units. The 950DT will feature four dies within a single chipset, representing a major design change. Huawei also introduced its UnifiedBus interconnect protocol, which allows up to 15,488 Ascend chips to be connected.
While Huawei is at the forefront of Chinese chipmakers racing to develop accelerators, Nvidia remains largely sidelined in the Chinese market due to government restrictions. Beijing has blocked or discouraged domestic use over security concerns. Nvidia CEO Jensen Huang has tried to reassure Chinese officials about the safety of his company’s products, but it remains uncertain when, or if, that will succeed. I covered this in detail in my latest article on NVDA.
CEO Huang, responding to the latest Chinese restrictions, said, “I’m disappointed with what I see, but there are broader issues that need to be resolved between China and the United States.” The company stated during its Q2 earnings call that it recorded no H20 sales in the quarter. It also expects zero AI chip sales to the country this quarter. Nvidia has been central to U.S.-China trade negotiations, which is why I don’t expect clarity on its position in China until/if a broader trade deal between the world’s two largest economies is reached.
Let’s now take a closer look at whether Huawei’s plans pose a serious competitive threat to Nvidia (assuming the latter will be able to sell its AI chips in China). Well, the upcoming Ascend 950 delivers only about 6% of the performance of Nvidia’s next-generation VR200 superchip. Of course, I doubt anyone expects Nvidia to be allowed to sell its most powerful offerings in China, but even if it produces a version with only half—or even a third—of the VR200’s performance, it would still far outpace the Ascend 950.
Another critical point is that Huawei’s major customers have primarily used its most advanced semiconductors only for inferencing. And Chinese companies have largely depended on Nvidia’s high-performance processors to train large-scale models. Of course, I cannot ignore a Bloomberg report stating that Huawei is working on a revamped next-generation Ascend chip, beyond the announced models, which could be powerful enough to train AI algorithms for major clients. However, since commercialization of that product isn’t expected until at least 2027, I don’t see much reason for concern at this stage. Moreover, The Information reported last month that Alibaba and Baidu have begun using their own internally designed chips to train AI models. The key point, however, is that those chips are used for smaller AI models, while both companies continue to rely on Nvidia chips for developing their most advanced models.
Finally, Nvidia offers a robust ecosystem that seamlessly integrates its chips with its software platform, forming what experts call a “moat.” This makes it costly and difficult for AI developers to switch to alternatives once their models are trained on Nvidia’s software. “The H20 comes with a complete ecosystem covering both hardware and software support, ensuring better compatibility and ease of integration,” said Brady Wang, associate director at Counterpoint.
Wall Street analysts remain highly optimistic about NVDA, as the stock has a top-tier consensus “Strong Buy” rating. Out of the 46 analysts covering the stock, 39 rate it a “Strong Buy,” two a “Moderate Buy,” four suggest holding, and one gives it a “Strong Sell” rating. The average price target for NVDA stock stands at $215.51, implying a 15.1% upside from current levels.
Despite the headwinds in China, Nvidia is expected to maintain strong growth momentum. Analysts project Nvidia’s adjusted EPS will climb 50.58% year-over-year (YoY) to $4.50 in fiscal 2026, while revenue is expected to rise 58.20% from the prior year to $206.45 billion.
So, what should you do with NVDA stock here? My answer remains unchanged: take advantage of any pullbacks to add more of this high-quality stock to your portfolio, as I expect it to continue outperforming the broader market in the years ahead. When it comes to China, competition from domestic players is certainly intensifying, but based on the points outlined above, I continue to believe that if/when Nvidia resumes chip sales in the country, demand for them will remain strong.
On the date of publication, Oleksandr Pylypenko had a position in: NVDA. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
