Key Takeaways
- Culper Research, which is short NVIDIA, says more than 20% of NVIDIA’s fiscal 2026 compute revenue came from China through diverted chips. NVIDIA says Hopper shipments to China were under 1% of data center revenue last quarter.
- Both can be true: a chip sold to a buyer in Southeast Asia and moved to China later wouldn’t count as a China sale.
- Other buyers could absorb much of Culper’s estimate, and NVIDIA’s margin recovered within a quarter of losing its China-only H20 sales.
- At 15x forward earnings, a five-year low, the stock prices in a lot of fear. Export rules in Congress are the bigger risk.
NVIDIA (NVDA) has a China problem, and nobody agrees on its size.
Culper Research, which is short the stock, said in a post on X back in May that it believes “over 20% of Nvidia’s FY 2026 compute revenues remained driven by China via illegal GPU diversion and Southeast Asian intermediaries.”
NVIDIA’s filing for the quarter ended July 26 said Hopper shipments to China were under 1% of data center revenue.
The two figures don’t measure the same thing.
Both Numbers Can Be True for NVIDIA
The question came back after NVIDIA’s board opened an independent investigation into reports that Jensen Huang was the target of a foreign intelligence effort. The New York Times has reported on his relationship with a former executive at Megaspeed, a Singapore company the Commerce Department had investigated over suspected chip smuggling into China.
NVIDIA’s figure covers one product line over one quarter. Culper’s covers a full year of compute demand. And if a buyer in Singapore or Malaysia buys a chip and reroutes it later, NVIDIA books the sale outside China. Culper is trying to count where the chips end up.
There’s evidence of leaks. Megaspeed’s Malaysian sister company reportedly bought at least $4.8 billion of AI equipment with NVIDIA chips from June 2024 to February 2026. And Bloomberg reported Tuesday that documents show China’s Moonshot AI signed an August contract to rent 32 servers with NVIDIA’s B300 chips in western China, servers valued at 432 million yuan (about $64.8 million). Moonshot disputes the documents.
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Culper’s Number Hurts Less If the Chips Find Other Buyers
Data center compute revenue was $162.4 billion in the year ended January 2026, so Culper’s claim works out to about $32 billion. Other buyers could cushion that, if NVIDIA can redirect the supply without long delays or price cuts. Analysts expect revenue to more than quadruple by the year ending January 2029:
NVIDIA’s outlook already assumes no China data center compute revenue, and management says supply, not demand, caps its guide for about 70% growth next fiscal year.
It has lost China sales before. After the April 2025 restrictions blocked its China-only H20, NVIDIA took a $4.5 billion charge. Gross margin fell to 60.5% that quarter, then bounced back the next:
The H20 was built for one market. A Blackwell chip turned away from a Southeast Asian middleman can go to any AI cloud still waiting on supply.
The bigger risk sits in Washington. The AI OVERWATCH Act, sponsored by Sen. Jim Banks with Sen. Elizabeth Warren, would make the Commerce Department certify that buyers of advanced chips won’t support adversaries’ militaries, and it’s in the Senate’s defense bill. It would also fast-track exports to allies by trusted US companies, but tighter checks could slow sales to everyone else.
At 15x, NVIDIA Already Prices In a Lot of Fear
NVIDIA’s forward P/E has fallen to 15x, a five-year low and well under its 36x average:
Even if Culper is right, the China revenue at stake matters less than Congress making overseas sales harder to close, and at this multiple, plenty of bad news is in the price. NVIDIA reports on Nov. 17. If management can’t say clearly where its Southeast Asian chips end up, Congress may decide for it in the defense bill.
So What Is NVIDIA Stock Actually Worth?
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