U.S. Chip Ban Crushes Nvidia (NVDA) Supply—DeepSeek Left Scrambling

Nvidia's AI gold rush just hit a sanctions-shaped roadblock. The U.S. chip ban isn't just throttling supply—it's strangling China's AI ambitions at the neck.

When the chips are down

DeepSeek's servers are starving for GPUs as Washington turns the screws. No more cutting-edge Nvidia silicon means Chinese firms are stuck playing 3D chess with last-gen hardware—while Wall Street still bets on AI like it's 1999 dot-com mania.

The real kicker? This artificial bottleneck is creating the very black market it aimed to prevent. Tencent and Alibaba are already hoarding chips like toilet paper in 2020. Guess even tech giants panic-buy when the Fed of compute says 'no.'

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It is worth noting that DeepSeek has not yet set a launch date for R2, as CEO Liang Wenfeng is reportedly unsatisfied with the model’s current performance, and engineers are still refining it before release. Internally, the company has been working closely with major Chinese cloud providers by sharing technical specifications to help them prepare for R2 deployment. But the ability of these cloud platforms to meet demand is uncertain, as most customers using DeepSeek’s previous model, R1, rely on the now-restricted H20 chips.

While companies like Huawei offer domestic alternatives to Nvidia chips, DeepSeek’s models are so closely tied to Nvidia’s hardware and software ecosystem that switching would significantly reduce performance and efficiency. In fact, R1’s success earlier this year led to a surge in orders for H20 chips from tech giants like ByteDance, Alibaba (BABA), and Tencent (TCEHY), who spent $16 billion on 1.2 million chips in early 2025. With no further H20s available, Chinese firms have resorted to using gaming GPUs like the RTX 4090, which are also restricted but more easily accessible on the black market. For now, R2’s success may depend on how long China’s current H20 supply can hold out.

What Is a Good Price for NVDA?

Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 35 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $175.28 per share implies 12.2% upside potential.