Jim Cramer Says Nvidia Should Stay Inside China’s AI Boom, Not Walk Away

While Nvidia (NVDA) prepares to report its Q1 of fiscal 2027 earnings on May 20, fresh headlines has again put the artificial intelligence (AI) giant’s China business in focus. Recent reports says that the U.S. has now approved sales of Nvidia’s H200 AI chips to select Chinese companies, signaling a potential shift in how the government treats advanced semiconductor exports to China. However, the deal has stalled from China's side as the country's focus is to be self-reliant. Amid this, CNBC’s Mad Money host Jim Cramer argues that Nvidia should continue selling AI chips to China instead of walking away from one of the world’s biggest AI markets. 

Is Cramer right? Let’s find out.

Why Cramer Believes Nvidia Shouldn't Walk Away

According to recent reports, the U.S. has approved sales of Nvidia’s H200 AI chips to 10 Chinese companies, including major technology firms such as Alibaba, Tencent, ByteDance, and JD.com.

Nvidia stock has climbed 19.3% YTD, outperforming the broader market gain of 8%.

Beijing hasn’t approved this yet, so shipments remain stalled amid political tensions and China’s push for self-reliance. Furthermore, the summit between U.S. President Donald Trump and Chinese President Xi Jinping did not involve any discussions on chip export control. This news might be disappointing for investors who had hoped the summit could lead to a breakthrough for Nvidia’s China business. 

Meanwhile, speaking on CNBC, Cramer said that walking away from China could be a strategic mistake for Nvidia at a time when the country remains one of the largest AI markets in the world. Cramer argued that keeping Chinese companies dependent on American technology is strategically smarter than pushing them toward building stronger domestic alternatives. China is aggressively investing in AI, cloud infrastructure, robotics, and semiconductor manufacturing. If Nvidia voluntarily steps back from that ecosystem, competitors might gain years of advantage building relationships with Chinese developers and enterprises.

Even Nvidia’s management acknowledged the same in the Q4 earnings call that Chinese competitors are becoming stronger and could eventually “disrupt the structure of the global AI industry over the long-term.” Nvidia CFO Colette Kress believes that to “sustain its leadership position in AI compute, America must engage every developer and be the platform for choice for every commercial business, including those in China.” Additionally, many analysts believe these restrictions could eventually weaken the U.S.'s influence over the global AI ecosystem rather than strengthening it.

Before tighter export restrictions were imposed, China accounted for 13% of Nvidia’s total revenue in fiscal 2025. However, after the restrictions hit, the number went down to just 9% of total revenue in the fiscal 2026. Cramer believes that Nvidia is strong enough to thrive either way as global demand for AI remains enormous. Still, he warned that completely shutting China out could eventually create stronger local competitors that challenge Nvidia’s long-term dominance in AI hardware

Management didn’t account for any revenue from China while guiding for the first quarter of fiscal 2027.  We will know more about the China situation when Nvidia reports its Q1 earnings on May 20.  For Q1, excluding China, Nvidia expects 77% year-over-year growth in revenue to $78 billion, plus or minus 2%, with most of the growth to come from the data center segment. The adjusted gross margin could be around 75%.

Wall Street Remains Bullish on Nvidia Stock

Overall, NVDA stock holds a consensus “Strong Buy" rating on the Street. Out of the 49 analysts covering the stock, 44 have a “Strong Buy” recommendation, three rate it a “Moderate Buy,” one has a “Hold” rating, and one analyst has a “Strong Sell" rating. Analysts have a mean target price of $273.16 for Nvidia stock, which implies potential upside of 22% from current levels. Plus, the high price estimate of $380 implies potential upside of 71% over the next 12 months.