Undoubtedly, the data center business revenue growth of AI chip giant NVIDIA (NVDA.US), with a market capitalization of $4.2 trillion, has significantly slowed down. This business segment, which has been the company's strongest and most core growth driver since 2023, provides H100/H200 and Blackwell architecture AI GPUs that serve as the powerful AI computing infrastructure foundation for data centers worldwide. Additionally, major headwinds from the Chinese market and China-US regulatory risks have jointly weakened the expansion prospects of this business segment.
Meanwhile, as NVIDIA's stock price momentum faces increasingly uncertain performance prospects and the strong resistance from overall high valuations in the US stock market, Chinese tech stocks are staging a super bull market rally. This is driven by China's AI investment boom led by internet giants like Alibaba (BABA) and Tencent (00700), and the "domestic chip substitution" wave led by domestic chip industry leaders like Cambricon. Semiconductor giants in Taiwan, Japan, and South Korea that span AI data center computing infrastructure, consumer electronics edge AI chips, and advanced process chip manufacturing are also following this bull market trajectory.
Although some Wall Street analysts who remain long-term bullish on NVIDIA believe that the expansion trends in AI infrastructure and high-performance network hardware business provide exciting new growth expectations, these businesses are much smaller in scale compared to NVIDIA's core data center business that the company heavily relies on. Unlike NVIDIA's leadership position in the AI chip field, the broader AI infrastructure and high-performance network sectors face intense competitive pressure, with no absolute market leader currently, and remain in fierce competitive battles.
Stock market performance also shows that as NVIDIA's overall performance growth rate tends toward moderation and normalization, the prospect of continuously outperforming the broader market is being questioned by the market.
**Institutions Declare: NVIDIA's Best Days May Be Behind Us**
A recent report from investment consulting firm JR Research, based on investment research platform Seeking Alpha, states: Given growth normalization and significant regulatory and execution risks, all investors are urged to consider carefully, as NVIDIA's best days may be well behind us.
JR Research indicates that investors who have been following NVIDIA's stock performance have already noticed that it has given back most of the gains from the second half of the year before the August 2025 earnings announcement. Therefore, as we enter September, the bullish narrative seems to have become cautious since NVIDIA's FY2026 second quarter earnings release.
JR Research states that for Jensen Huang and his team, this is still "business as usual" to some extent, but undoubtedly, the revenue growth rate of its most precious data center business has significantly slowed down.
JR Research believes that while the easing of China-US geopolitical relations is constructive progress, it should still be viewed cautiously, especially regarding the substantial obstacles NVIDIA has encountered in formally promoting its re-entry into the Chinese market with H20 AI chips. The formalization of the 15% commission framework attributed to the US government could be viewed as a procedural step. However, China seems determined to prevent H20 from easily returning to the Chinese market, citing serious questions about national security risks from potential backdoors embedded in NVIDIA chips.
Some Chinese companies' continued demand for NVIDIA H20 chips demonstrates the strong stickiness of the CUDA ecosystem moat. However, if geopolitical regulatory barriers continue to hinder its rapid return, this moat may be further weakened by the Chinese AI ecosystem built by Chinese AI chip design leaders like Alibaba and Cambricon.
Therefore, Wall Street analysts generally do not expect NVIDIA's China AI chip revenue to fully recover in revenue terms, which may also provide significant catch-up opportunities for domestic competitors. Considering this, some analysts are not surprised that NVIDIA management has tried to downplay the near-term positive impact of its China business recovery and exclude it from short-term performance guidance.
NVIDIA CEO Jensen Huang stated at the earnings conference that the Chinese AI chip market business represents a considerable $50 billion short-term to medium-term performance growth opportunity. Further market entry delays may also exacerbate NVIDIA's execution and revenue generation risks in the Chinese market during the remainder of FY2026.
Although Wall Street analysts continue to raise their 12-month price targets for NVIDIA after the latest earnings announcement, it is equally clear that those moments of "surprise beats and significant guidance raises" and Wall Street's "doubling pace" of dramatically raising NVIDIA price targets have almost become a thing of the past.
JR Research believes that it would not be surprising if Jensen Huang once again "pulls magic from his hat" to convince us that NVIDIA's best moments are yet to come - not only is the AI GPU cluster ramp-up of the Blackwell series still progressing healthily, but the company is also betting on the trillion-dollar AI infrastructure thesis, which could reshape everyone's understanding of NVIDIA's full-stack ecosystem beyond CUDA. This is also the core logic for most NVIDIA bulls who insist on being bullish about NVIDIA hitting a $5 trillion market cap.
However, the fact is that despite raising average price targets, Wall Street analysts have not changed the downward-sloping slope of NVIDIA's performance growth expectation curve. Although deepening deployment in the AI high-performance networking field is expected to enhance its diversification opportunities, the operating scale of only $10 billion is still limited compared to its nearly $150 billion data center business.
Moreover, in the high-performance Ethernet data center business, NVIDIA must compete head-to-head with Broadcom (AVGO.US) and Marvell (MRVL.US) in the long term - both of which have significant market share advantages compared to latecomer NVIDIA and will actively defend their territory.
JR Research states that if we believe NVIDIA's forward EBITDA multiple of 28x is still below its 10-year average of 34.3x, high-conviction investors might consider the stock appears relatively undervalued. However, if we refer to the "market wisdom" reflected in NVIDIA's long-term chart above, questions arise: why hasn't buying continued from the highs reached in August?
Interestingly, not only has buying failed to continue, but most of August's gains had evaporated before we entered September. JR Research is not surprised by this, stating: "If we consider the possibility that its growth logic may continue to normalize over the next two fiscal years, I believe the market is keenly pricing in this possibility."
"Unless Jensen and his undisputedly talented team can reignite 'Jensen magic' around the overall AI infrastructure thesis over the next five years, I think expecting NVIDIA to continue delivering excellent excess alpha returns from current positions may be asking too much," JR Research states.
**Asian AI Computing Sector's Stock Price Surge Unstoppable**
In stark contrast to the slowing stock price growth momentum of AI computing industry leaders like NVIDIA in the US stock market, Asian tech stocks, particularly Chinese cloud computing leaders like Alibaba, and China's AI computing industry chain have recently experienced explosive growth.
Driven by the explosion in global AI infrastructure demand, China's A-share market's computing infrastructure sector and "domestic chip substitution" related sectors under the backdrop of China-US competition have become market focuses, with multiple AI computing and chip leading stocks hitting new highs while performance also surged simultaneously.
As Chinese internet and cloud computing giant Alibaba announced better-than-expected earnings and demonstrated an ambitious "artificial intelligence super blueprint," it further ignited China's stock market AI investment boom, driving Chinese tech stocks that have been favored by global funds this year to maintain strong momentum. This super wave about artificial intelligence is comparable to the 2023 US tech stock "crazy bull" market.
After announcing earnings, Alibaba's Hong Kong shares surged over 17%, with market value soaring by over $50 billion. Financial data shows Alibaba's cloud computing business revenue grew 26% year-over-year, with AI cloud computing-related revenue maintaining triple-digit year-over-year growth for the eighth consecutive quarter, and capital expenditure increased to 38.6 billion in the second quarter.
More significantly, Alibaba has developed a new generation of AI inference chips through its subsidiary Pingtouge Semiconductor. This chip aims to fill the gap left by restrictions on NVIDIA AI GPUs in the mid-to-high-end AI chip computing market. The chip design is compatible with NVIDIA's CUDA ecosystem and announced it will be manufactured by domestic chip companies, though specific foundry partners were not disclosed.
Alibaba also stated it will proceed as planned with its established AI capital expenditure and investment of up to 380 billion yuan.
Alibaba's latest earnings and incredibly strong future AI spending outlook further fuel market bullish sentiment toward "China's AI chip leader" and "domestic chip substitution" leader Cambricon.
Cambricon has recently achieved resonance between stock price and performance, highlighting the incredible heat of domestic AI investment boom, attracting foreign institutional funds including Wall Street to flood into China's A-share and Hong Kong stock markets.
In terms of performance, Cambricon's operating revenue in the first half of 2025 was 2.881 billion yuan, a staggering 4347.82% year-over-year increase. The company achieved net profit attributable to parent company of 1.038 billion yuan, compared to a loss of 530 million yuan in the same period last year.
Against the backdrop of optimism about Chinese cloud service providers' AI capital expenditure expansion and surging domestic AI chip demand, Wall Street financial giant Goldman Sachs raised its price target for Cambricon again just one week apart.
In its latest report released on September 1, Goldman Sachs raised Cambricon's 12-month price target from 1,835 yuan to 2,104 yuan, an increase of 14.7%, while maintaining a "Buy" rating. The latest price target implies the stock has 41% upside potential from its August 29 closing price.
This upgrade closely follows Cambricon's incredibly strong second quarter 2025 results. Goldman Sachs' bullish report points out that Chinese cloud service giants are accelerating AI infrastructure investment, combined with supportive government industrial policies, jointly driving demand for domestic AI chips, while Cambricon as a "domestic chip substitution" leader and AI computing industry chain leader will benefit.
Additionally, revenue scale growth and operational efficiency improvements will also help Cambricon improve its operating cost ratio.
In the semiconductor equipment field, this is arguably the most severely "choked" advanced manufacturing area in China's chip industry chain by the United States for a long time. In recent years, US sanctions on China's chip industry chain have continued to escalate, focusing on semiconductor equipment, raw materials, and chip manufacturing links.
Therefore, to achieve comprehensive domestic production in chip manufacturing, various high-end semiconductor equipment required for chip manufacturing - a field that is basically in the preliminary development stage "from 0 to 1" - is the core focus of government funds at all levels and private capital.
The recent strong stock price momentum of this sector benefits from China's stock market's unprecedented "domestic chip substitution" storm. Especially recently, the US removed Samsung, Intel, and SK Hynix's China-based entities from the "Validated End User" authorization list, meaning these three chip giants may no longer be able to use any manufacturing patents, semiconductor equipment, or semiconductor raw materials based on US technology.
This is equivalent to Samsung, Intel, and Hynix directly giving up their market share in China, accelerating benefits for domestic substitution, especially the process of semiconductor equipment domestic substitution.
Additionally, semiconductor equipment is also a beneficiary sector under the global corporate AI deployment boom. Current global AI chip demand is extremely strong, and this explosive demand is expected to continue until 2027. Therefore, chip manufacturers like TSMC, Samsung, and Intel will comprehensively expand capacity, plus storage giants like SK Hynix and Micron expanding HBM capacity, all requiring large-scale procurement of semiconductor equipment needed for chip manufacturing and advanced packaging, with some core equipment needing upgrades.
After all, AI chips have higher logic density, more complex circuit designs, and higher power and precision requirements for equipment, which may lead to higher technical requirements in lithography, etching, thin film deposition, multi-layer interconnect, and thermal management, thus requiring customized manufacturing and testing equipment to meet these requirements.
Therefore, semiconductor equipment giants can be said to hold the "lifeline of chip making." Currently, China's chip industry chain urgently needs domestic semiconductor manufacturing equipment in the most important chip-making processes including Atomic Layer Deposition (ALD), Chemical Vapor Deposition (CVD), Physical Vapor Deposition (PVD), Rapid Thermal Processing (RTP), Chemical Mechanical Polishing (CMP), wafer etching, ion implantation, as well as wafer Hybrid Bonding and Through Silicon Via (TSV) - these two major chiplet advanced packaging processes - to accelerate the domestic substitution process.
JPMorgan Asset Management Asia-Pacific equity fund manager Oliver Cox states that Chinese semiconductor equipment companies have the "shovel seller" advantage - regardless of how the competitive landscape of downstream chip manufacturers changes, equipment demand will continue to benefit from industry upgrades and the domestic chip substitution wave under China-US competition. This fund manager, who manages $2.1 billion in assets, has outperformed 95% of peers this year.
Semiconductor giants in Taiwan, Japan, and South Korea that span AI data center computing infrastructure, consumer electronics edge AI chips, and advanced process chip manufacturing are also following this bull market trajectory. The market believes that semiconductor giants like TSMC, Tokyo Electron, Advantest, SK Hynix, and Samsung not only benefit from the AI infrastructure boom but will also benefit from the upcoming edge AI covering AI smart glasses, smartphones, and PCs, as well as the new round of chip industry prosperity cycle showing strong expansion momentum. In contrast, US Fabless manufacturers like NVIDIA do not possess the attributes of growth spanning multiple product terminals and chip manufacturing fields.
TSMC's stock price has risen significantly this year, and Taiwan's stock market capitalization first broke through the $1 trillion milestone in July 2025. Since the year's low in April, TSMC's Taiwan stock and US ADR stock prices have cumulatively risen over 50%, with market value jumping to surpass Warren Buffett's Berkshire Hathaway level, ranking ninth in the global market capitalization rankings.
This unprecedented market capitalization reflects investors' high confidence in TSMC's prospects in the AI wave: as the core chip foundry for giants like Apple, NVIDIA, and AMD, TSMC is viewed as an indispensable "chip manufacturing cornerstone" in the global AI computing industry chain and edge AI boom.