To The Moon

$NVIDIA(NVDA)$’s rally got a fresh jolt from its announcement to resume H20 AI chip sales to China, a move that reversed prior export restrictions and reignited bullish sentiment across the semiconductor space.

However, the June CPI report—showing inflation ticking up to 2.7% YoY—tempered that momentum by reigniting rate hike fears and pressuring broader equity valuations.

In this article I would like to share how this setup looks like and the simulation that I have done to check if the support for Nvidia rally could continue.

I am holding Nvidia long term and have been adding when Nvidia have its pullback and consolidation before.

Bullish Tailwinds

• China Reentry: Resuming H20 sales could restore ~$7B in quarterly revenue, offsetting Q1 inventory write-downs.

• AI Demand: Global AI infrastructure buildout remains robust, with hyperscalers and sovereign buyers driving sustained GPU orders.

• RTX Pro Launch: Nvidia’s new China-compliant chip expands its footprint in smart factories and logistics.

Bearish Headwinds

• Sticky Inflation: June CPI’s uptick dims hopes for near-term rate cuts, lifting real yields and compressing high-multiple tech valuations.

• Tariff Risk: Trump’s August 1 tariff deadline looms, potentially impacting Nvidia’s supply chain and cost structure.

• Valuation Sensitivity: With a forward P/E near 50x, Nvidia’s stock is vulnerable to macro shocks and earnings misses.

Strategic Outlook

Nvidia’s ability to continue its run hinges on whether AI-driven revenue growth can outpace macro drag. If H20 sales ramp quickly and Blackwell adoption accelerates, it could offset rate-driven multiple compression. But if inflation persists or trade tensions escalate, expect rotation into lower-beta AI infrastructure plays or barbell rebalancing toward yield sleeves.

In this section I am doing a simulation of how Nvidia’s Growth, Yield, and Optionality sleeves might rebalance under three CPI and rate regimes—tailored to our macro-responsive barbell framework:

Nvidia Barbell Sleeve Simulation: CPI & Rate Scenarios

Tactical Implications

• In a disinflationary pivot, Nvidia’s growth sleeve dominates via Blackwell adoption, China H20 sales, and hyperscaler expansion.

• Under sticky inflation, the yield sleeve gains favor—enterprise and auto segments offer pricing power and margin stability.

• In a rate shock, optionality plays like sovereign AI, robotics, and edge deployments become asymmetric hedges.

Next, I am layering Nvidia’s macro-driven barbell sleeve shifts into a return cone simulation to visualize how outcomes may vary under different CPI and rate regimes. This model reflects asymmetric return profiles, volatility bands, and sleeve-specific contributions.

Nvidia Return Cone Simulation: July–October 2025

Scenario 1: Disinflation + Rate Cuts

Scenario 2: Sticky CPI + Higher-for-Longer Rates

Scenario 3: CPI Re-acceleration + Surprise Hike

Strategic Lens

• Scenario 1 favors risk-on positioning with tilt toward Nvidia’s Blackwell/H20 cycle.

• Scenario 2 requires barbell balance, overweighting yield and trimming growth exposure.

• Scenario 3 supports a defensive pivot into sovereign and robotics optionality—especially if trade tension or FX spikes worsen.

In the following section I would like to share how it looks like when we break down the long-term strategic effects of each CPI and rate regime on Nvidia’s business model, valuation, and competitive positioning:

🟢 Disinflation + Rate Cuts

Effect: Structural tailwinds for Nvidia’s AI infrastructure dominance

• Capex Acceleration: Lower rates reduce financing costs, enabling faster Blackwell ramp and sovereign AI deployments

• Valuation Expansion: Multiple re-rating likely as real yields fall and growth premiums rise

• Global Demand Surge: Hyperscaler and enterprise AI spend scales aggressively, reinforcing Nvidia’s moat

• CUDA Ecosystem Lock-In: Developer adoption deepens, widening competitive gap vs. AMD/Intel

• Long-Term Outcome: Nvidia cements its role as the backbone of AI-driven GDP growth through 2030

🟡 Sticky CPI + Higher-for-Longer Rates

Effect: Mixed impact with margin compression and selective growth

• Capex Moderation: Higher rates slow hyperscaler expansion, delaying some AI infrastructure projects

• Valuation Pressure: Forward P/E compresses, especially if earnings growth decelerates

• Yield Sleeve Resilience: Enterprise, auto, and gaming segments offer margin stability

• Strategic Shift: Nvidia may prioritize domestic production and cost optimization (e.g., Blackwell onshoring by 2029)

• Long-Term Outcome: Growth persists but at a tempered pace; optionality plays (robotics, edge AI) become more strategic

🔴 CPI Re-acceleration + Surprise Hike

Effect: Defensive pivot and geopolitical hedging

• Export Risk: China H20 sales face renewed restrictions; revenue volatility increases

• Onshoring Surge: Nvidia accelerates domestic fab investments ($500B AI infra pledge)

• Optionality Expansion: Sovereign AI, robotics, and agentic systems gain traction as defensive growth vectors

• Valuation Volatility: High-beta profile leads to sharp drawdowns; institutional flows turn cautious

• Long-Term Outcome: Nvidia evolves into a diversified AI infrastructure provider with deeper vertical integration and geopolitical insulation

Now we will model how Nvidia’s sector rotation weightings might evolve under different CPI and rate regimes, using our barbell framework and macro overlays:

Sector Rotation Weighting Simulation: Nvidia Across Macro Regimes

Strategic Implications

• Tech Sector: Dominates in disinflationary regimes but becomes vulnerable under rate shocks due to high multiples.

• Industrials: Gains favor in stagflation and rate hike scenarios—robotics, edge AI, and sovereign infrastructure offer resilience.

• Consumer Discretionary: Cyclical exposure makes it sensitive to inflation and FX; gaming demand may soften under pressure.

• Comm Services: Optionality sleeve plays like Omniverse and immersive platforms become asymmetric hedges in volatile regimes.

Final Notes

If we looked at how the market have performed over the past few weeks, we can see that though tech sector faced some pullbacks, but the upside outweigh the pullbacks, and from what we are going to see from earnings season from tech sector, like $Taiwan Semiconductor Manufacturing(TSM)$ earnings came in positive. Taiwan Semiconductor Manufacturing (TSM) reported record-breaking Q2 2025 earnings, with net profit surging 61% and revenue climbing 38.65% year-over-year. This strong performance signals a robust demand environment within the tech sector, primarily driven by the insatiable need for Artificial Intelligence (AI) and High-Performance Computing (HPC) chips.

TSM's dominance in advanced process nodes (3nm and 5nm, accounting for 60% of wafer revenue) and leadership in advanced packaging technologies (CoWoS) are key. This indicates that companies like NVIDIA and AMD, relying on TSM for their AI accelerators, are seeing significant growth, propelling the broader AI and semiconductor markets. While some concerns linger around currency headwinds and rising operational costs from overseas fabs, TSM's bullish full-year guidance for 30% revenue growth in 2025 reinforces the strong, ongoing AI supercycle.

This would bore well for stocks like Nvidia and chip makers.

Technical Analysis - Exponential Moving Average (EMA)

Nvidia is up another 0.95%. There is a strong push by Nvidia to almost 175. Daily bulls are in full control of the daily chart now.

Any pullback looking for a higher low. Anything above 152 looking for a daily higher low for further trend continuation. The 12-EMA level have not been lost yet, and if you want to know if the move is done, we need to watch for the

We have not lost this 12 EMA, we need to watch for daily downtrend with the loss of the 12 EMA. then we will know if we are in for more than one day of consolidation. If you do see that, we are looking for a weekly higher low and the most relevant area of support would still be 144 to 151.

The weekly bulls are in full control right now. If we are looking for any possible further trend continuation, the move lower than weekly higher low at 170 would make Nvidia a decent buy.

One thing we need to also understand is Nvidia is trading at a forward price earnings of 39, a PEG ratio of 1.7. This is not a bad data but they have very strong EPS and revenue growth numbers.

Summary

While rising interest rates and broader market concerns can temper momentum for many companies, Nvidia's specific catalysts, particularly the resumption of H20 sales to China and the ongoing, explosive demand for AI infrastructure, are powerful enough to potentially allow it to continue its strong run. The AI market is still in its early innings of infrastructure buildout, and Nvidia is the undisputed leader in this critical area.

The H20 news is a significant win that mitigates a previous headwind and reopens a major revenue stream. Investors will be keenly watching the actual financial impact of these resumed sales in upcoming earnings reports and any further guidance on the Blackwell ramp-up and AI demand outlook for the second half of 2025. While short-term volatility due to macro factors is always possible, the fundamental drivers for Nvidia remain exceptionally strong.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia could continue to ride on the positive AI demand and also its advantage for the H20 chip sales to resume in China.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.