Nvidia's “best days” seem far away, now it's an “AI carnival time” belonging to Asian tech stocks

Undoubtedly, NVDA.US (NVDA.US), the “AI chip hegemon” with a market capitalization of 4.2 trillion US dollars, has had the strongest growth since 2023 and is also the most core business — the data center business revenue growth rate has clearly slowed. It is the H100/H200 and Blackwell architecture AI GPUs provided by this business unit to provide extremely powerful AI computing power infrastructure for data centers around the world. Furthermore, significant headwinds from the Chinese market and regulatory risks in China and the US have weakened the prospects for significant expansion of the business.

At the same time, at a time when Nvidia's stock price rally is facing increasingly vague performance prospects and strong resistance from the overall overvaluation of the US stock market, under the Chinese AI investment boom driven by Internet giants such as Alibaba and Tencent and the “domestic chip substitution” storm led by domestic chip industry chain leaders such as the Cambrian period, China's technology stocks are experiencing a super bull market. Semiconductor giants in the Taiwanese, Japanese, and South Korean markets that span AI data center computing power infrastructure, consumer electronics end side AI chips, and advanced process chips are also following this bull market trajectory.

Although according to some Wall Street analysts who have been bullish on Nvidia for a long time, the expansion trend of AI infrastructure and high-performance network hardware business provides exciting new growth expectations, it is much smaller than the core data center business that Nvidia focuses on. Moreover, unlike Nvidia's leading position in the field of AI chips, extensive AI infrastructure and high-performance networks are under intense competitive pressure. Currently, there are no absolute market leaders, and they are still in the midst of fierce competition. The performance of the stock market also shows that at a time when Nvidia's overall performance growth rate is moderating and normalizing, the prospects for continuing to outperform the market are being questioned by the market.

An agency shouted: The best time to belong to Nvidia is probably over

According to a report recently released by JR Research, an investment consulting agency based on the investment research platform Seeking Alpha, all investors are urged to consider carefully in view of the normalization of growth and the huge risks at the regulatory and enforcement levels, because Nvidia's best days may be behind us (Nvidia's Best Days Look Well Behind Us).

JR Research said that if investors have been watching Nvidia's stock price performance, what they have noticed is that most of the increase in the second half of the year before the August 2025 earnings report was released. As a result, as we begin September, the bullish narrative seems to have become cautious since the release of Nvidia's FY 2026 second fiscal quarter earnings report. JR Research said that for Hwang In-hoon and his team, this is still “business as usual” to some extent, but there is no doubt that the revenue growth rate of its most valuable data center business has slowed significantly.

JR Research believes that although the easing of the geopolitical relationship between China and the US is a constructive development, it should still be viewed with caution. In particular, Nvidia has encountered substantial obstacles in formalizing re-entry into the Chinese market with the H20 AI chip. Legalizing the 15% commission framework attributable to the US government may be viewed as a procedural step. However, the Chinese side seems determined to prevent the H20 from easily returning to the Chinese market on the grounds that it is seriously questioning the national security risks brought about by Nvidia chips that may be embedded in the back door.

The continued demand for Nvidia H20 chips from some Chinese companies shows the strong stickiness of the CUDA ecological moat. However, if geo-regulatory barriers continue to hinder its rapid return, the moat may be further weakened by China's AI ecosystem built by Alibaba, Cambrian and other leaders in Chinese AI chip design. As a result, Wall Street analysts generally did not expect Nvidia to fully recover AI chip revenue for China in terms of revenue, which may also provide a major opportunity for local competitors to catch up.

With this in mind, some analysts aren't surprised that Nvidia management is trying to downplay the recent positive impact of the recovery of its Chinese business and exclude it from short-term performance guidance. Nvidia CEO Huang Renxun said at the performance conference that China's AI chip market business can be said to represent a significant short-term to mid-term performance growth opportunity of 50 billion US dollars. Further market entry delays may also increase Nvidia's execution and revenue generation risks in the Chinese market for the rest of FY 2026.

Although Wall Street analysts continued to raise Nvidia's target share price for the next 12 months after the announcement of the latest results, it is also becoming increasingly clear that those moments of “surprise surpassing expectations and drastically raising the guidelines” and the moments where Wall Street drastically raised Nvidia's target share price at a “doubling pace” are almost all a thing of the past.

JR Research believes that for some time to come, it won't be surprising that Hwang In-hoon has once again “changed tricks from a magic hat” to try to convince us that Nvidia's best moment hasn't arrived — not only is the Blackwell series AI GPU cluster still progressing healthily, but the company is also betting on the trillion-dollar AI infrastructure argument, which may reshape everyone's understanding of Nvidia's full-stack ecosystem beyond CUDA. This is also the core logic of most Nvidia bulls insisting on Nvidia's impact on the $5 trillion market value.

However, the truth is that despite raising the average price target, Wall Street analysts have not changed the downward slope of the expected curve for Nvidia's performance growth. Although deepening the layout of AI high-performance networks is expected to enhance diversification opportunities, the operating scale of only $10 billion is still limited compared to its nearly $150 billion data center business.

Furthermore, in the high-performance Ethernet data center business, Nvidia must also compete head-on with Broadcom (AVGO.US) and Mywell (MRVL.US) for a long time — the latter two have a significant market share advantage over latecomers Nvidia and will actively defend the strength of the market.

According to JR Research, if we consider that Nvidia's 28 times forward EBITDA ratio is still 34.3 times lower than its 10-year average, then high-belief investors may think that the stock appears to be relatively undervalued. However, if we refer to the “market wisdom” reflected in the NVDA long-term chart above, the question arises: why did buying fail to continue the high set in August?

Interestingly, not only did buying not continue, but most of August's gains had evaporated before we entered September. JR Research isn't surprised, and the agency said, “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 this possibility.”

“Unless Hwang In-hoon and his undisputed team can rekindle the 'Jensen magic' around the overall AI infrastructure argument over the next five years, I think continuing to expect Nvidia to maintain excellent excess alpha earnings from the current position is probably too high.” JR Research said.

The sharp rise in Asian AI computing power sector stock prices is unstoppable

In stark contrast to Nvidia and other leaders in the US stock market AI computing power industry chain slowing down, Asian technology stocks, especially Chinese cloud computing leaders such as Alibaba, and China's AI computing power industry chain have recently seen a sharp rise. Driven by the explosion in global demand for AI infrastructure, the computing power infrastructure sector of the Chinese A-share market and the “domestic chip replacement” related sector in the context of the game between China and the US have become the focus of the market. The stock prices of many leading AI computing power and chip stocks have repeatedly reached new highs, and their performance has also increased dramatically at the same time.

As China's internet and cloud computing giant Alibaba announced results that exceeded market expectations and showed an ambitious “artificial intelligence superblueprint,” further igniting the AI investment boom in the Chinese stock market and driving Chinese technology stocks, which have been favored by global capital since this year, to maintain strong gains. This super heatwave about artificial intelligence is comparable to the “mad cow” market of US technology stocks in 2023. After announcing the results, Alibaba's Hong Kong stock surged by more than 17%, and its market capitalization soared by more than 50 billion US dollars.

According to financial data, Alibaba's cloud computing business revenue increased 26% year over year, revenue related to AI cloud computing power maintained three-digit year-on-year growth for eight consecutive quarters, and capital expenditure increased to 38.6 billion yuan in the second quarter. More importantly, Alibaba has developed a new generation of AI inference chips through its Pingtouge Semiconductor Company. This chip is designed to fill the gap left by Nvidia AI GPUs after the middle and high-end AI chip computing power market was limited. The chip design is compatible with Nvidia's CUDA ecosystem, and it was announced that domestic chip companies will do the OEM, but the specific chip foundry was not disclosed. Alibaba also said it will advance the established AI capital expenditure and investment of up to 380 billion yuan according to the plan.

Alibaba's latest performance and an extremely strong outlook for future AI spending have further boosted the market's bullish sentiment towards the “Chinese AI chip leader” and Cambrian, a leader in “domestic chip replacement.” The Cambrian Era can be described as a recent resonance between stock prices and performance, highlighting the immense popularity of domestic AI investment boom and attracting foreign institutions, including Wall Street, to the Chinese A-share and Hong Kong stock markets. In terms of performance, Cambrian's revenue for the first half of 2025 was 2,881 billion yuan, a year-on-year increase of 4347.82%. The company achieved net profit of 1,038 million yuan to mother and a loss of 530 million yuan in the same period last year.

Against the backdrop of optimism about the expansion of AI capital expenditure by Chinese cloud computing service providers and the surge in demand for local AI chips, Wall Street financial giant Goldman Sachs once again raised its target price for the Cambrian period after only a week. In its latest report released on September 1, Goldman Sachs raised the 12-month Cambrian target price from RMB 1,835 to RMB 2104, an increase of 14.7%, and maintained a “buy” rating. The latest price target means that the stock has room to rise 41% from the closing price on August 29.

This increase follows the extremely strong results announced by Cambrian for the second quarter of 2025. Goldman Sachs's bullish report indicates that Chinese cloud service giants are speeding up investment in AI infrastructure, superimposing industrial policies supported by government agencies, and are jointly driving demand for local AI chips, and the Cambrian Era as a leader in the “domestic chip replacement” and AI computing power industry chain leader will benefit from this. In addition, increased revenue scale and improved operating efficiency will also help increase the Cambrian operating cost rate.

The semiconductor equipment field can be described as the advanced manufacturing sector where China's chip industry chain has been “stuck” most severely by the US for a long time. In recent years, US sanctions against China's chip industry chain have been continuously escalated, and are concentrated on semiconductor equipment, raw materials, and chip manufacturing. Therefore, in order to achieve all-round localization in the field of chip manufacturing, the various high-end semiconductor equipment required for chip manufacturing is basically in the field of initial development “from 0 to 1,” and is the core focus area of government funding at all levels and private sector funding.

The recent rise in stock prices in this sector can be described as extremely strong, benefiting from the unprecedented “domestic chip replacement” storm in the Chinese stock market. In particular, the US recently removed Samsung, Intel, and SK Hynix companies from the “verified end user” authorized list, which means that these three chip giants may not be able to use any manufacturing patents, semiconductor equipment, or semiconductor raw materials based on US technology in the future. This is equivalent to Samsung, Intel, and Hynix directly relinquishing their market shares in China, speeding up the process of favorable domestic substitution, especially domestic semiconductor equipment replacement.

In addition, semiconductor equipment is also a beneficiary sector under the AI boom in global enterprise deployment. Currently, global demand for AI chips is extremely strong, and this strong demand is expected to continue until 2027. Therefore, chip manufacturers such as TSMC, Samsung, and Intel will expand production capacity across the board. In addition, storage giants such as SK Hynix and Micron will expand HBM production capacity, they all need to purchase semiconductor equipment needed for chip manufacturing and advanced packaging in large quantities, and even some core equipment needs to be upgraded. After all, AI chips have higher logic density, more complex circuit designs, and higher power and accuracy requirements for devices. This may lead to higher technical requirements in lithography, etching, thin film deposition, multi-layer interconnection, and thermal management, which in turn requires customized manufacturing and testing equipment to meet these requirements.

Therefore, semiconductor equipment giants can be described as holding the “lifeblood of chip making”. Currently, the Chinese chip industry chain urgently needs local semiconductor manufacturing equipment in the most important core manufacturing links such as atomic layer deposition (ALD), chemical vapor deposition (PVD), rapid heat treatment (RTP), chemical mechanical polishing (CMP), wafer etching, and ion implantation, as well as wafer hybrid bonding and silicon through silicon via (Silicon Through Silicon Via), the two major chiplet advanced packaging links urgently require local semiconductor manufacturing equipment to accelerate progress Domestic substitution process.

Oliver Cox, Asia Pacific Equity Fund Manager at J.P. Morgan Asset Management, said that Chinese semiconductor equipment vendors have the advantage of being “sellers” — no matter how the competitive landscape of downstream chip manufacturers changes, equipment demand will continue to benefit from industrial upgrading and the wave of domestic chip substitution under the Sino-US game. The fund manager's fund, which manages $2.1 billion in assets, has performed more than 95% of its peers this year.

Semiconductor giants that manufacture AI data center computing power infrastructure, consumer electronics end-side AI chips, and advanced process chips in Taiwan, Japan, and South Korea are also following this bullish trajectory. The market believes that semiconductor giants such as TSMC, Tokyo Electronics, Edwin Test, SK Hynix, and Samsung will not only benefit from the upcoming AI infrastructure boom, but will also benefit from the upcoming AI boom covering AI smart glasses, smartphones, and PCs, and the new wave of chip industry boom cycles showing a strong expansion trend. It has the attributes of growth across multiple fields such as multi-product terminals and chip manufacturing.

TSMC's stock price rose sharply this year, and in July 2025, Taiwan's stock market value broke the $1 trillion milestone for the first time. Since the annual low in April, the cumulative increase in TSMC stock and ADR stock prices of US stocks has exceeded 50%, and the market capitalization has jumped to surpass Buffett's Berkshire Hathaway level, ranking ninth in the global market capitalization ranking. This unprecedented market capitalization reflects investors' high confidence in TSMC's future in the AI wave: as the core chip foundry for giants such as Apple, Nvidia, and AMD, TSMC is regarded as an indispensable “chip manufacturing cornerstone” in the global AI computing power industry chain and the end-side AI boom.