TL;DR

President Trump arrived in Beijing on May 13 for a high-stakes summit with Chinese President Xi Jinping. Nvidia CEO Jensen Huang, Apple CEO Tim Cook, and Elon Musk are part of the US tech delegation. Markets are reading this as a potential opening for eased chip export restrictions, sending Nvidia to an all-time high, lifting AMD and Micron sharply, and driving a broad rally in Chinese AI stocks. The Nasdaq is rising despite a hot April wholesale inflation print published earlier today.

What Happened: Trump Lands in Beijing With the Chip Industry in His Delegation

President Trump touched down in Beijing this morning for a summit with President Xi Jinping focused on trade, technology, and the ongoing US-Iran conflict. Trump is seeking China's assistance in brokering a settlement in the Middle East while also hoping to reset the bilateral technology relationship.

The most market-moving detail came when Trump confirmed that Jensen Huang, the founder and CEO of Nvidia, was joining the trip alongside Apple CEO Tim Cook and Elon Musk. For chip investors, that is not a symbolic gesture. Nvidia's revenue from China had fallen to effectively zero following successive rounds of US export restrictions on advanced AI chips. Huang himself confirmed the collapse in a recent earnings call. His presence in the delegation immediately raised the question of whether the summit could produce a policy shift.

As of 11:45 a.m. ET on May 13, Nvidia had climbed approximately 2.75%, pushing its market capitalization to $5.4 trillion and setting a new all-time high. Advanced Micro Devices (AMD) gained 1.57%. Micron Technology (MU) rose 4.72%. Intel and Qualcomm also opened at or near record highs. The PHLX Semiconductor Index (SOX), a widely tracked benchmark for chip stocks, has now gained roughly 66% year to date.

Chinese technology stocks added a second layer to the rally. Alibaba (BABA) surged more than 7% despite reporting a 95% collapse in adjusted earnings per share for fiscal Q4. Investors looked past the headline profit drop and focused on Alibaba's aggressive AI and cloud infrastructure spending as a long-term bet, while the summit narrative provided an additional tailwind. Bloomberg separately reported that Chinese AI model developers surged broadly on expectations that a deal could expand access to Nvidia's H200 chips.

Why Chip Stocks Are Moving on the Trump-Xi Summit

The rally is driven by one core investor thesis: if the Trump-Xi summit produces even a partial relaxation of chip export controls, Nvidia's addressable market expands significantly. China represents the world's second-largest economy and one of the most aggressive AI build-outs globally. Nvidia's chips, particularly the H200 and Blackwell-generation hardware, are exactly what Chinese data centers need to compete in the AI race.

The presence of Huang in an official US delegation sends a signal that chip access is at least on the table as a negotiating point. Even the optionality is enough to move markets. Export restrictions introduced since 2022 have progressively cut off Nvidia's China sales. Restoring even a portion of that access would represent a meaningful revenue catalyst for the entire US semiconductor supply chain.

The Nasdaq's resilience in the face of today's hot April Producer Price Index (PPI) reading, covered in an earlier post, also reflects how dominant the China-tech narrative has become this session. Investors are discounting the inflation signal and pricing in the geopolitical positive instead.

Implications for Traders

Semiconductor and tech stock traders: The move in NVDA, AMD, and Micron reflects a repricing of China re-entry risk. Traders who have been underweight semis due to export overhang may find the cost of that position rising quickly. The SOX is already up 66% year to date, so positioning is extended. Any summit outcome that falls short of expectations could produce a sharp reversal from these levels.

Equity index and futures traders: Nasdaq futures strength is concentrated in the chip cohort. Broad index exposure is riding the tech wave despite the inflation backdrop. S&P 500 futures are positive but less energized than Nasdaq-weighted instruments. Traders running cross-asset positions should note that oil remains elevated near $104 per barrel due to the Iran conflict, which creates a cost-of-energy drag on the broader index rally.

Crypto traders: Bitcoin is holding above $80,000, with exchange reserves near seven-year lows and whale wallets continuing to accumulate. The CLARITY Act Senate markup remains on the calendar for this week, providing a direct regulatory catalyst for crypto independent of today's macro news. Crypto is not the primary driver today but is holding its ground without meaningful selling pressure.

Potential Positives vs Negatives

Positives:

  • A partial or full relaxation of chip export restrictions to China would be a direct earnings catalyst for Nvidia, AMD, and Micron across multiple quarters.
  • A broader US-China trade detente could reduce supply chain uncertainty for Apple and other companies with deep manufacturing ties to China.
  • Beijing's potential cooperation on the Iran conflict could ease Strait of Hormuz supply risks and put downward pressure on oil prices, reducing one of the main inflation inputs weighing on the broader market.

Negatives:

  • Summit optimism is a thin catalyst. No formal agreements have been announced as of midday. Markets may be front-running an outcome that does not materialize.
  • US national security agencies and Congressional hawks have consistently opposed chip sales to China. Any relaxation of controls could face domestic political headwinds regardless of what is agreed in Beijing.
  • Chip stocks are technically extended after a 66% SOX gain year to date. A high-conviction analyst recently flagged a 25-30% correction risk in the sector. A summit that underwhelms could be the trigger for that move.
  • Alibaba's 95% EPS collapse is a reminder that China's AI build-out is burning cash aggressively. Actual profitability for the ecosystem depends on demand materializing at scale over time.

What Could Happen From Here

Base case (next 24-72 hours): The summit produces constructive language but no immediate policy change on chip exports. Markets give back a portion of today's gains as the initial optimism fades. NVDA consolidates in the $145-$155 range. The SOX holds above its 200-day moving average. Confirmation to watch: an official joint statement from Trump and Xi that mentions technology cooperation in general terms without specific export commitments.

Upside case: A formal announcement of a chip export licensing framework, or a direct exemption for a defined set of AI chips, appears in a joint communique. NVDA potentially adds another 5-10% and pulls the broader Nasdaq to new highs. The oil market also responds positively if China agrees to mediate the Iran conflict, easing Hormuz supply concerns and bringing Brent back toward $95. Confirmation: named policy action on chip controls included in summit documents.

Downside case: The summit ends without substantive tech policy progress, and national security framing dominates post-summit messaging. Chip stocks reverse sharply as the rally proves to be noise. Combined with a sticky inflation print and $104 oil, this could pressure the Nasdaq into a consolidation pullback of 3-5%. Confirmation: summit statement focused entirely on geopolitics with no mention of technology trade; Huang departs without any announced agreement.

What to Watch Next (24 Hours)

  • Summit joint statement: Any language on technology trade or chip access is the single most important datapoint today. Watch for named references to export controls or licensing frameworks.
  • Nvidia and AMD commentary: If either company issues a statement about China access following the summit, that will move stocks in extended hours.
  • Strait of Hormuz and Iran: Brent crude near $104 remains a pressure point. Any sign of progress on a ceasefire would ease the energy inflation overlay on today's PPI concerns. See the S&P 500 risk map post for context on the oil-to-equities transmission.
  • CLARITY Act Senate markup: If the crypto regulation bill advances this week, it is a distinct positive for Bitcoin and Ethereum independent of the China story.
  • SOX technical levels: A close below the 20-day moving average in the semiconductor index would signal that summit optimism is fading and that sector rotation may be starting.

Frequently Asked Questions

Why did Nvidia's China revenue fall to zero?
The US government has progressively restricted the sale of advanced AI chips to China since 2022, citing national security concerns. The restrictions cover chips above defined performance thresholds, which includes most of Nvidia's data center products used for AI training and inference. Huang confirmed in a recent earnings call that China sales had dropped to essentially zero as a result.

What is the H200 chip and why does China want it?
The H200 is Nvidia's high-performance AI training chip. Chinese companies building large language models and data center infrastructure need chips at this performance level to remain competitive. Without access to them, Chinese firms must rely on domestically developed alternatives or older hardware that requires far more units to achieve equivalent output.

Sources

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Header image source: pexels by Luca Sammarco. License: PEXELS.