Finance
Trump’s pivot on Nvidia chips gives China a leg up over the U.S. in the AI race
Nvidia logo and Chinese flag are seen in this illustration taken Aug. 27, 2025.
Dado Ruvic | Reuters
BEIJING — U.S. President Donald Trump’s move to allow Nvidia to ship a more advanced artificial intelligence chip to China will significantly boost Beijing’s tech capabilities, according to analysts.
That signals a shift in policy as the U.S., over the past several years, has ramped up restrictions on Chinese access to advanced semiconductors. Though the curbs have not kept Chinese companies such as DeepSeek from finding ways to build AI models that rival their U.S. peers, often at lower operating costs.
“Compute is our main advantage,” Rush Doshi, assistant professor at Georgetown University, said on social media platform X, noting that China already has an edge over the U.S. in electrical power, engineers and other areas.
“By giving this up we increase the odds the world runs on Chinese AI,” said Doshi, who was a deputy senior director for China and Taiwan affairs with the National Security Council under the Biden administration.
Trump’s on Monday said in a post on his Truth Social platform that Nvidia can ship a more advanced chip called the H200 to “approved customers in China” and other countries — on condition the U.S. gets a 25% cut. That’s up from the 15% rate agreed to in the summer.
He noted that Nvidia’s more advanced Blackwell and Rubin chips were not part of the China deal.
“The Biden administration forced our Great Companies to spend BILLIONS OF DOLLARS building “degraded” products that nobody wanted, a terrible idea that slowed innovation, and hurt the American Worker,” Trump said.
Nvidia had created a less powerful chip called the H20 to comply with U.S. rules, but had to halt shipments to China in April.
“This move is giving China a bunch of advanced AI compute it wouldn’t otherwise have,” said Tim Fist, director of emerging technology at Washington, D.C.-based think tank Institute for Progress.
“The new Chinese stack will be NVIDIA chips, Tencent/Baidu/Alibaba cloud, and DeepSeek/Qwen/Kimi models,” Fist said in a social media post on X, noting that these AI capabilities will then compete with U.S. rivals overseas.
The think tank on Sunday published a report that said the U.S. advantage over China in AI compute next year diminishes from around 10 times to at most 5 times, if Nvidia were allowed to export H200 chips.
The H200 can help many Chinese AI developers improve their models, making the chip “far more useful and effective” than the H20, said George Chen, partner and co-chair, digital practice, The Asia Group.
He pointed out that Trump’s decision is a sign of improving Washington-Beijing relations as the U.S. leader plans to visit China in April. Nvidia “has a good time window to sell H200 but it won’t be … forever.”
China aims for tech self-reliance
Faced with U.S. restrictions, China has sought to reduce its reliance on foreign technology. The country’s upcoming 5-year plan that kicks off next year underscored how policies and government funds will increasingly go toward homegrown chips and AI applications.
Chinese telecom giant Huawei in September revealed its multi-year plans to create chips that would have the most computing power in the world when clustered at scale, according to the company.
“China will continue to do everything in its power to reduce its dependency on US AI chips, even while it retains access to US chips,” Chris McGuire, a senior fellow for China and emerging technologies at the Council on Foreign Relations, said on X. He pointed out that it will still take time as China doesn’t plan to make a chip better than Nvidia’s H200 until at least the fourth quarter of 2027.
Trump’s decision “negates the biggest U.S. advantage over China in AI,” McGuire said, calling the move “a seachange in U.S. policy, and a significant strategic mistake.”
The White House Office of Science and Technology Policy did not immediately respond to a CNBC request for comment.
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Nvidia CEO Jensen Huang has often spoken in public about China’s improving AI capabilities, and called on the U.S. to let the company sell its products to the country.
U.S. restrictions so far have not kept China completely shut off from advanced ships.
Separately, the U.S. Department of Justice on Monday announced it had seized more than $50 million in advanced graphics processing units meant for China and other restricted areas. The release said people apprehended and others “exported and attempted to export” at least $160 million worth of Nvidia H100 and H200 chips between Oct. 2024 and May 2025.
Nvidia shares rose 2% in after-hours following Trump’s post. Chinese AI chip names Moore Threads climbed more than 2% and Cambricon rose by over 1% in the mainland market, while SMIC shares fell more than 2% in Hong Kong trading.
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For the generation that should be in its “peak savings years,” the prospect of retiring on time has shifted from a plan to a prayer.
A newly released Employee Financial Wellness Survey by PwC found that nearly 50% of Gen X employees are pushing back their retirement dates, citing stagnant wages, rising everyday costs, and a lack of liquid savings.
Additionally, only 38% of Gen Xers believe they can retire when they originally planned, and more than half of this demographic expect to withdraw funds from their retirement accounts early to cover short-term costs.
“For employers, this isn’t a future problem. Financial anxiety during peak career years can affect focus and engagement,” PwC researchers write. “If the risks are clear, the question is why more employees aren’t taking action. It’s not a lack of desire. Most employees want stability, confidence and to feel in control. But many don’t feel equipped to get there.”
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The primary driver of this retirement delay is the inability to save as inflation eats away at monthly expenses, the report notes. Twenty-five percent of the total workforce is living without a buffer, and nearly half cannot meet basic household expenses.
Nearly half of Gen X workers are delaying retirement, PwC reports. (Getty Images)
“[Forty-nine percent] say their compensation isn’t keeping up with costs. As expenses rise faster than income, day-to-day trade-offs are becoming routine. Employees aren’t just feeling squeezed. They’re making difficult financial decisions to stay afloat,” the PwC report continues..
As a result, when Gen Xers cannot afford to leave their current jobs, the entire corporate ladder stalls, creating business risks, with companies facing higher costs as older talent remains on payroll longer than expected.
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“When employees dip into retirement funds early or delay retirement altogether, it affects more than personal finances and retirement plan leakage,” the report says. “It may also influence workforce planning, healthcare costs, succession timing and overall organizational stability.”
The findings also show that a significant portion – 41% – of the workforce feel they were never given the tools to manage a crisis of this magnitude, leading to a sense of being “overwhelmed” by financial choices.
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PwC provided a call to action for employees and their employers, encouraging them to reduce the stigma around financial education, foster trust through human coaches, emphasize skill building and focus on day-to-day finances before long-term goals.
“Employees define financial wellness simply: less stress, fewer surprises and the freedom to make financial choices with confidence. For employers, that’s the opportunity.”
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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