Nvidia has been the undisputed leader in the global AI hardware market. Its powerful GPUs are the backbone of artificial intelligence training and data-center operations across the world. Recent estimates show that Nvidia controls between 80% and 92% of the market for AI accelerators and data-center GPUs in 2025. This dominance has translated into enormous financial gains. The company’s revenues have been soaring, driven by demand for generative AI, cloud computing, and advanced data centers.
China has been one of the largest contributors to this success. In 2024, Nvidia earned around $17 billion from the Chinese market alone. With strong profitability, record margins, and a return on equity higher than most of its peers, Nvidia seemed untouchable. But its heavy reliance on China also makes it vulnerable, especially as geopolitical and regulatory tensions intensify.
For the last few years, Nvidia has been navigating restrictions from the United States, which has blocked the export of its most advanced chips to China. These rules, aimed at limiting China’s access to cutting-edge AI hardware, have forced Nvidia to create modified versions of its processors, such as the H20 chip, designed specifically for the Chinese market. However, even these products have faced hurdles.
China has been moving quickly to reduce dependence on foreign suppliers. Tech giants like Alibaba and Baidu have already started training their AI models on home-grown chips, such as Baidu’s Kunlun P800, instead of relying entirely on Nvidia hardware. This shift, though gradual, signals a long-term strategic push that could eat into Nvidia’s market share in China.
The latest and most serious challenge comes from Beijing itself. In September 2025, China’s State Administration for Market Regulation announced that a preliminary investigation had found Nvidia in violation of the country’s antimonopoly law. The case stems from Nvidia’s 2020 acquisition of Mellanox Technologies, an Israeli networking firm. Chinese regulators had approved the deal at the time but imposed conditions. The current findings suggest Nvidia may have failed to comply with those requirements.
The investigation began in December 2024, and while no penalties have been finalized, the risks are significant. Under Chinese law, fines can range from 1% to 10% of a company’s annual sales if violations are confirmed. For a company of Nvidia’s size, this could amount to billions of dollars. Beyond financial penalties, the investigation raises the possibility of stricter regulations, operational restrictions, or even forced changes in its business structure within China.
The probe has also been accompanied by growing security concerns. In July 2025, China’s Cyberspace Administration summoned Nvidia over potential risks linked to the H20 chip, a product specifically designed to comply with U.S. export restrictions. This came after reports that the chip might create vulnerabilities or security issues. Production and procurement of the H20 have already been disrupted by these concerns, adding to the uncertainty around Nvidia’s ability to continue selling high-end hardware in China.
Such scrutiny reflects a deeper issue. Even when Nvidia designs products tailored for China, they are now subject to investigation and potential bans. That makes its Chinese revenue stream far less predictable than in earlier years.
Financial markets have responded quickly to these developments. Following the announcement of the antimonopoly findings in September 2025, Nvidia’s stock fell by more than 2% in pre-market trading. Investors are increasingly worried that escalating regulatory actions could limit Nvidia’s access to China, one of its most important markets.
Analysts have also begun to cut their revenue forecasts. Morgan Stanley has warned that Nvidia faces more disruption from China’s export restrictions than initially expected. The delays in licensing for the H20 chip are expected to weigh on the company’s revenue in upcoming quarters. Even though Nvidia remains highly profitable, these regulatory and political challenges are now being factored into market expectations.
Nvidia’s dominance rests on several pillars: its technological leadership, its wide ecosystem of developers and software, and its established reputation in AI computing. However, the current developments show that this position is not unshakable.
The first risk comes from regulation. Both the United States and China are exerting pressure, albeit for different reasons. U.S. export controls limit what Nvidia can sell, while Chinese investigations could impose financial and operational penalties. Together, these forces create a complex environment where Nvidia has less control over its strategy.
The second risk lies in China’s efforts to build its own chip industry. Domestic firms are quickly narrowing the performance gap, particularly in specialized tasks like AI inference. Supported by state funding and policy, these Chinese alternatives could gradually take market share, especially if government contracts favor local suppliers.
The third challenge is supply chain uncertainty. With both Washington and Beijing scrutinizing Nvidia’s technology, the company must constantly redesign products, seek export licenses, and respond to investigations. This creates costs, delays, and uncertainty that could slow growth.
Despite these challenges, Nvidia’s dominance will not disappear overnight. The company’s GPUs remain unmatched in many high-end tasks, particularly in training the largest AI models. Its CUDA software ecosystem is deeply entrenched, making it difficult for competitors to displace. Global demand for AI infrastructure is also booming, ensuring that Nvidia continues to have a massive addressable market outside China.
However, dominance does not mean immunity. In China, where demand is huge and political factors are decisive, Nvidia’s position looks increasingly fragile. The shift to domestic chips by Alibaba and Baidu shows that alternatives are gaining traction. If fines, restrictions, or outright bans follow from the current investigation, Nvidia could lose a meaningful share of its $17 billion China revenue base.
The key factor to watch is the outcome of China’s antimonopoly probe. If regulators impose heavy penalties or demand structural changes, the impact on Nvidia’s operations in China could be substantial. Another important trend is the progress of Chinese AI chipmakers, which will reveal how fast they can close the gap with Nvidia. At the same time, the continuation of U.S. export controls will limit what products Nvidia can ship, further complicating its strategy.
Nvidia’s quarterly results in the coming year will provide insight into how much revenue from China is at risk. Investors and industry observers will also monitor whether other countries follow China’s lead in subjecting Nvidia to antitrust scrutiny.
Nvidia’s dominance in the AI hardware market remains strong, but its grip is no longer as secure as it once was. The Chinese antimonopoly probe has exposed vulnerabilities that stem not only from regulatory compliance issues but also from broader geopolitical and competitive forces. With China accelerating its push for self-sufficiency and regulators on both sides of the Pacific tightening controls, Nvidia’s future in one of its largest markets looks increasingly uncertain.
The company still enjoys powerful advantages, but the risks have grown sharper. Whether Nvidia’s dominance merely weakens or undergoes a more dramatic erosion will depend on how the current probe unfolds and how quickly Chinese competitors rise to challenge its position.