Cramer backs Nvidia selling AI chips in China — but says the stock can thrive either way

Jim Cramer, the host of CNBC's "Mad Money," has voiced support for Nvidia's ability to sell artificial intelligence chips to China. He argues that allowing these sales would benefit the U.S. by keeping Chinese firms dependent on American technology, rather than forcing them to innovate their own competing products. During a recent segment, Cramer warned that if the U.S. pushes China to develop its own chips, it could lead to rapid advancements and competition, given China’s vast resources. Nvidia's sales of AI chips to China have faced restrictions for years, particularly following export limitations implemented during the Biden administration, citing national security concerns. Investors are closely monitoring Nvidia's potential to resume significant sales in the world's second-largest economy, especially after the company highlighted uncertainties regarding approvals earlier this year. Nvidia's CFO, Colette Kress, indicated during a February earnings call that while some H200 products were approved for China-based clients, the company had yet to see any revenue from these sales and was unsure whether further imports would be permitted. However, in March, CEO Jensen Huang expressed optimism at Nvidia's GTC conference, revealing that the company had started to receive purchase orders and was resuming manufacturing operations. As Nvidia prepares to announce its earnings on Wednesday, investors are eager for insights into the company's China strategy, particularly in light of Huang's recent appearance at a diplomatic summit with former President Donald Trump. Notably, Nvidia's financial outlook currently assumes no revenue from the Chinese market. Cramer emphasized that the pivotal decision regarding Nvidia's fate with China lies more with the Chinese government than with U.S. policymakers. He believes that President Xi Jinping is faced with a critical choice: to permit Chinese firms to purchase Nvidia's modified chips, thus increasing reliance on U.S. technology, or to accelerate the growth of domestic companies. Despite the challenges posed by the Chinese market, Cramer maintains that Nvidia's stronghold in the AI sector and its reasonable valuation compared to competitors make it an appealing investment. He highlighted Nvidia's crucial role in the AI revolution, stating, "You buy Nvidia, not for China, not because of the Cerebras IPO, but because it's actually a cheap stock."