Nvidia’s H20 stockpile won’t meet accelerating China demand: Jefferies

Investing.com -- Nvidia’s inventory of H20 AI chips is unlikely to satisfy surging demand in China following a temporary lift of U.S. export restrictions, according to Jefferies.

The firm estimates that Nvidia (NASDAQ: NVDA) holds between 600,000 and 900,000 H20 units, while demand could be as high as 1.8 million.

“We believe as long as the U.S. and China are in a ‘truce’ state for trade negotiation, NVDA will be allowed to meet reasonable China demand,” said Jefferies.

The firm noted that “NVDA likely has delivered ~300K in 1Q25,” roughly in line with pre-ban levels.

Despite limitations on supply, Chinese cloud service providers and internet firms continue to favour Nvidia chips. Jefferies cited three key reasons: “1) its CUDA ecosystem, 2) better cluster performance than local chips... and 3) limited supply of local chips.”

While the H20 is “good for inferencing only,” Jefferies expects strong demand to persist even for downgraded future products.

They state that a next-generation chip, the B30, is expected in the fourth quarter of 2025 with “reduced memory specs to comply with a likely new criterion for AI chip export control.”

Jefferies raised its China AI capital expenditure forecast for 2025 by 40% to $108 billion, and lifted its 2025–2030 estimate by 28% to $806 billion.

The firm also sees power demand rising by 12% to 29GW.

Although capital spending by China’s internet firms may show temporary weakness in the second quarter due to GPU rental supply, Jefferies said this “does not represent slowdown in Internet players’ AI efforts.”

“Most importantly, NVDA chips have CUDA and NVDA offers no supply constraint,” Jefferies concluded.

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