Nvidia’s share price continued its upward trajectory on Tuesday, marking a third consecutive day of gains. Sentiment across the US semiconductor sector has been buoyed by renewed speculation that the authorities might soon ease restrictions on high-end GPU sales to China. By mid-session, Nvidia shares had climbed roughly 1% to trade at $185.50, as the firm looks to end the year on a more stable footing. This recovery follows a volatile period characterized by valuation concerns and shifting export regulations, which had previously weighed heavy on the artificial intelligence sector.
While nothing has been set in stone, the mere suggestion that Washington might permit limited exports of advanced AI processors has prompted analysts to revisit their forecasts. Market participants are once again considering upside scenarios that had largely been discounted earlier in the year.
The potential windfall from a reopened market
Simon Leopold, an analyst at Raymond James, noted that predicting a definitive outcome remains tricky, particularly with variables such as Chinese regulatory responses and potential new export levies still in play. Nevertheless, the financial upside appears substantial. For Nvidia, a partial reopening of the Chinese market could generate between $7 billion and $12.5 billion in additional revenue, potentially boosting earnings per share by $0.15 to $0.30 by 2026.
Speculation is currently focused on the possible resumption of H200 GPU shipments to major Chinese internet firms and hyper-scalers. Even if volumes remain modest, the sale of tens of thousands of units at premium prices would represent a significant injection of capital. Meanwhile, AMD could also see a boost, with estimates suggesting incremental revenue of up to $800 million, largely driven by demand for its MI308 accelerators from companies like Alibaba.
AI remains the primary engine of global growth
Beyond the headlines regarding trade policy, the broader outlook for AI spending remains remarkably robust. Barclays analysts recently highlighted that the United States is currently navigating its most significant capital expenditure cycle in decades, with AI infrastructure acting as the primary catalyst. In fact, companies tied to the sector have accounted for nearly 80% of the S&P 500’s total returns and profit growth over the last three years.
This momentum is expected to carry through into 2026, supported by an anticipated easing of financial conditions and a more favourable regulatory environment. Despite the focus on China, Nvidia’s long-term growth is still expected to be driven primarily by domestic hyper-scalers, sovereign AI initiatives, and enterprise customers. The sheer scale of investment already underway makes it difficult for the market to ignore the sector’s future impact.
Markets defy robust GDP data as Nasdaq climbs
The tech-heavy Nasdaq index reflected this optimism, edging higher after reclaiming its 50-day moving average. Interestingly, this rally occurred despite a fresh batch of economic data that might otherwise have dampened spirits. The Department of Commerce reported third-quarter GDP growth of 4.3%, significantly higher than the 3.2% consensus.
While such a strong figure initially led traders to question whether early 2026 interest rate cuts were still on the cards, the uncertainty proved fleeting. The Dow, S&P 500, and Nasdaq all moved into positive territory, eyeing a fourth straight day of gains. Many investors believe that a more dovish future Federal Reserve leadership could still deliver rate cuts even if economic growth remains firm, maintaining a healthy appetite for risk assets.
Sector performance and the holiday outlook
Technology and communication services continue to lead the pack, rising by 0.65% and 0.91% respectively. Alongside Nvidia, other semiconductor heavyweights such as Marvell and Broadcom saw significant interest, while Alphabet and Amazon provided further support for the large-cap growth narrative. Conversely, defensive sectors like healthcare and consumer staples lagged, and software firms such as Atlassian saw some profit-taking after a recent run-up.
As the festive break approaches, trading volumes are expected to thin out. The New York Stock Exchange is scheduled for an early close on Wednesday before shutting entirely for Christmas Day. For now, the market seems content to remain constructive, though the tone for the final week of the year will likely depend on whether Washington offers any further clarity on the next Fed chair or the evolving trade landscape.