A broad-based tech rally led by Nvidia has the potential to add $1 trillion to the U.S. stock market in the coming months, according to analysts, as artificial intelligence (AI) infrastructure demand continues to surge. The momentum, driven by a mix of easing interest rate expectations and renewed access to the Chinese market, has also sparked speculation that the AI boom could indirectly bolster Bitcoin sentiment. However, uncertainty remains about the implications of the Trump administration’s policies on semiconductor exports and China’s regulatory scrutiny of U.S. tech firms.

Nvidia, a central figure in the AI-driven market rebound, has seen its stock experience sharp fluctuations amid shifting dynamics with its China business. The company recently resumed sales of its H20 chips to Chinese customers after a suspension in April that led to a $5.5 billion inventory write-off. This resumption contributed to a 1.7% gain in Nvidia’s stock on Friday, though the stock ended the week with a 1.4% decline. The uncertainty stems from reported security concerns in China regarding alleged “backdoors” in Nvidia chips—claims the company has firmly denied, stating that its hardware does not contain remote access vulnerabilities.

Nvidia CEO Jensen Huang has been in ongoing discussions with both the Trump administration and Chinese regulators. He recently mentioned efforts to secure approval for a next-generation AI chip, the B30A, tailored for China’s AI data centers. This chip, based on the Blackwell architecture, is estimated to operate at about half the speed of Nvidia’s top-tier B300 chips, but it is designed to comply with U.S. export controls. Huang has also emphasized that the H20 chip poses no threat to national security, despite reports from China’s Cyberspace Administration alleging “serious security issues” with the product. Nvidia has denied such claims and is working with Beijing to address the concerns.

The broader market has also been influenced by AI-driven capital expenditures. Hyperscale firms are increasingly adopting advanced networking solutions to support distributed AI operations. Recently, Nvidia introduced Spectrum-XGS Ethernet, a new networking technology designed to interconnect multiple data centers across vast geographical distances, enabling the formation of “giga-scale” AI super-factories. The technology allows for dynamic network adaptation and near-doubled performance of the Collective Communications Library, facilitating seamless communication across geographically dispersed AI clusters. Companies like CoreWeave have already committed to adopting the technology, signaling confidence in the long-term growth of AI infrastructure.

Analysts have noted that the AI sector remains in the early stages of its development, with significant capital investments still flowing into training and data center operations. While concerns about an AI “bubble” have emerged—fueled by comments from figures like OpenAI CEO Sam Altman—most experts argue that demand for AI infrastructure is robust. Wedbush analyst Dan Ives has described Nvidia’s upcoming earnings report as a “positive catalyst” for the market, reinforcing the view that the AI revolution is still in its early innings. Meanwhile, capital expenditure trends in cloud computing and AI model development continue to support long-term growth, despite short-term volatility.

Investor sentiment has also been shaped by geopolitical factors, particularly the ongoing U.S.-China tech rivalry. The Trump administration has been accused of restricting China’s access to cutting-edge U.S. chip technology, a policy that has led to calls for greater self-reliance in China’s tech sector. However, recent trade negotiations have seen some easing of restrictions, including the resumption of H20 sales to China and a mutual reduction in non-tariff barriers. These developments have been viewed as a sign that both sides are seeking a more stable, albeit limited, cooperation on tech exports.

As the AI sector continues to evolve, its performance is likely to influence broader financial markets. The “Magnificent Seven” tech stocks, including Nvidia, have played a dominant role in driving returns for investors, with some exchange-traded funds (ETFs) holding a significant portion of these companies in their portfolios. With AI infrastructure demand expected to grow further, the tech rally—led by Nvidia—could continue to shape the trajectory of global markets, even as regulatory and geopolitical uncertainties persist.

Source:

[1] What Nvidia’s China Confusion Means For Tech Giant And AI (https://www.investors.com/news/technology/nvidia-stock-nvda-china-ai-bubble/)

[2] NVIDIA Introduces Spectrum-XGS Ethernet to Connect Distributed Data Centers into Giga-Scale AI Super-Factories (https://nvidianews.nvidia.com/news/nvidia-introduces-spectrum-xgs-ethernet-to-connect-distributed-data-centers-into-giga-scale-ai-super-factories)

[3] Nvidia is in talks with Trump administration about new chip for China, company’s CEO says (https://www.pbs.org/newshour/economy/nvidia-is-in-talks-with-trump-administration-about-new-chip-for-china-companys-ceo-says)

[4] AI Stocks: Best Artificial Intelligence Stocks To Watch Amid Market Volatility (https://www.investors.com/news/technology/artificial-intelligence-stocks/)

[5] Meet the Marvelous Vanguard ETF With 57.7% of Its Portfolio Invested in the Magnificent Seven Stocks (https://www.nasdaq.com/articles/meet-marvelous-vanguard-etf-577-its-portfolio-invested-magnificent-seven-stocks)

[6] Does the Opening of the China’s Stock Market Improve Informational Efficiency? (https://www.sciencedirect.com/science/article/abs/pii/S154****325015272)

[7] Foreign investors bullish on China’s stock market as shares hit 10-year high (https://www.ciie.org/zbh/en/news/exhibition/news/20250821/49959.html)