Key Takeaways
- Chinese AI and cloud firms, Alibaba among them, have ordered about 6 million NVIDIA RTX Pro 5500 chips worth about $70 billion, but expect to get only about 1% of them over the next four months.
- With too little capacity to go around, NVIDIA is building its most advanced, higher-margin chips first, so China’s orders are left waiting.
- Analysts still expect NVIDIA’s revenue to reach $692 billion in the year ending January 2028, with very little from China in that figure.
- NVIDIA trades at 17x forward earnings, its lowest in three years, with its next report due Nov. 17.
Alibaba (BABA), Tencent, ByteDance and other Chinese AI and cloud firms have ordered about 6 million RTX Pro 5500 chips from NVIDIA (NVDA), worth about $70 billion, Bloomberg reported today. They expect to get roughly 1% of them over the next four months.
Talk about a backlog.
The news came a day after the Financial Times reported that NVIDIA told its cloud clients to cap Chinese customers at 49% of their business. Together, the two stories show that almost none of China’s demand for NVIDIA’s chips is turning into NVIDIA revenue.
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Six million chips ordered, tens of thousands coming
Here’s how the orders stack up:
- About 6 million RTX Pro 5500 chips on order, up from more than 3 million last month, according to Reuters
- More than $11,000 a chip, or about $70 billion in all
- Several thousand chips by the end of this year, then tens of thousands around February, the only confirmed shipments so far
- Roughly 700,000 by the end of 2027, by one key buyer’s internal estimate
The RTX Pro 5500 falls below the cutting-edge chips Washington bars from China, yet it’s among the best AI chips Chinese firms can buy. NVIDIA has warned customers that capacity will stay limited. It and Taiwan Semiconductor, which makes its chips, are reportedly giving more capacity to next-generation products like Rubin, and NVIDIA is building its most advanced, higher-margin chips first, for buyers like OpenAI and Anthropic.
NVIDIA wouldn’t comment on shipment numbers. Its spokesperson blamed policy on both sides instead, saying US firms “continue to be restricted by a combination of outdated US export controls, which cover gaming products released nearly a half a decade ago, and China’s own limits on US imports.”
My read: it’s some of each. Either way, those chips aren’t in NVIDIA’s revenue, and the capacity goes to customers buying its pricier products.
The estimates don’t need China
At roughly 1%, the next four months come to about $700 million in chips. For comparison, NVIDIA guided to $108 billion of revenue for its October quarter alone.
Even the 700,000 chips the buyers hope to get by the end of 2027 would only come to about $8 billion, spread over more than a year.
China is already small and shrinking for NVIDIA. Customers based in China and Hong Kong brought in $19.7 billion of its $215.9 billion of revenue in the year ended January 2026, down from $25.0 billion the year before. And NVIDIA’s outlook already leaves out China data center compute revenue.
Analysts expect NVIDIA’s revenue to more than triple from that $215.9 billion to $692 billion in the year ending January 2028, then reach $903 billion the year after.
Bloomberg’s report shouldn’t move those estimates, since NVIDIA’s own outlook already leaves China’s data center demand out.
Alibaba’s own chips can’t fill the gap
Short of NVIDIA chips, Alibaba and its Chinese peers are likely to keep buying domestic inference chips from Huawei and Cambricon, and from Alibaba’s own T-Head. That’s more business for T-Head. But US limits on chipmaking equipment and a long shortage of high-bandwidth memory hold back how many chips Chinese makers can produce, and push up their prices. Huawei raised prices on its most advanced accelerators by 60% around September.
For Alibaba’s cloud business, the question is how much AI computing power it can get, and at what price. Its next earnings report should show whether the shortage is slowing its cloud growth.
Cheap without China
NVIDIA trades at 17x forward earnings. That’s its lowest in the last three years, and well below its 30x average over that time.
The way I see it, that price leaves China out entirely, and NVIDIA doesn’t need it. If supply loosens and both governments let the chips through, that’s billions in revenue the estimates aren’t counting on. If not, the estimates rest on demand from everyone else, which is what they already do.
Of course, the bigger questions for the Nov. 17 report lie elsewhere. Management expects gross margin to bottom at 71% to 72% in the January quarter as memory costs climb. Any word on RTX Pro supply on that call will show how long China’s orders have to wait.
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