This Could Be a Huge Catalyst for Nvidia's Business in 2026
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Nvidia may finally be able to sell its advanced chips to a huge market: China.Nvidia (NVDA 3.27%) has been a powerhouse stock to own in recent years. Every time its valuation looks like it's getting a bit expensive, the stock continues to rise even higher. As of Tuesday's close, the stock was up 38% since the start of the year. It's especially impressive when you consider that it soared 171% last year and 239% the year before that. While the returns have slowed, they are still incredible. By comparison, this year, the S&P 500 has risen by 16%. Heading into 2026, investors may expect another slowdown for the world's most valuable company, whose market cap sits at $4.5 trillion right now. But there could be a catalyst around the corner, which could make 2026 another stellar year for Nvidia. Image source: Getty Images. Could Chinese chip sales give Nvidia a boost in 2026? This month, the U.S. government has given Nvidia the OK to sell its H200 artificial intelligence (AI) chips to certain customers in China. It will be available only to "approved customers," and the U.S. government will take a 25% cut of the sales. The deal will apply to other chipmakers as well. It's a huge development for Nvidia, which has largely excluded China from its guidance due to the uncertainty around export restrictions. Previously, the U.S. agreed to allow Nvidia to sell its H20 chip to China in exchange for a 15% cut of sales. That failed to drive growth, however, as the Chinese government banned tech companies from buying them, due to concerns about their security and reliability. The H200 chips, which are much more advanced and around six times faster than the H20 chips, however, may be too compelling to pass up. Advertisement Nvidia's valuation is high, but a strong growth rate makes the stock look modestly priced Currently, Nvidia's stock trades at a forward price-to-earnings multiple of 24, based on analysts' expectations for future profits. That's a bit higher than the S&P 500 average of 22, but not by much. However, if there is an increase in guidance next year as a result of strong demand from China for the H200 chips, that could drastically change things for Nvidia. Previously, Nvidia CEO Jensen Huang estimated that the Chinese AI market could be worth as much as $50 billion within two to three years. That would be a massive opportunity to tap into and could help accelerate Nvidia's growth rate, resulting in stronger expectations, leading to analyst upgrades and a more attractive valuation overall, when considering the growth prospects. In its most recent earnings report for the quarter ended Oct. 26, Nvidia's revenue totaled $57 billion, up 62% from the same period last year. That's a strong growth rate already, and if chip sales to China take off, it may potentially rise higher next year. ExpandNASDAQ: NVDANvidiaToday's Change(-3.27%) $-5.91Current Price$175.02Key Data PointsMarket Cap$4.3TDay's Range$174.62 - $182.8252wk Range$86.62 - $212.19Volume204MAvg Vol191MGross Margin70.05%Dividend Yield0.02% Is Nvidia's stock a good buy heading into 2026? Nvidia is the market leader in AI chips, which are crucial for tech companies to build the latest and greatest AI models and products. Even though the stock may be the most valuable in the world today, it's arguably worth the premium given how important Nvidia has become to the global AI revolution. I do think it's important for investors to temper their expectations not just for Nvidia but for the overall markets next year, as there is a possibility of a pullback in AI spending, at least temporarily, if the economy slows. However, with Nvidia being an unstoppable business in AI, it's hard not to like it as a long-term investment. Although its gains may be more modest next year, Nvidia's stock still looks like a solid buy in 2026, as it can continue to outperform the market. And any growth related to the Chinese market could give it an added boost.About the AuthorDavid Jagielski, CPA, has been a contributing Motley Fool stock market analyst covering healthcare, consumer staples, consumer discretionary, and technology stocks since 2017. David has more than 10 years of experience in finance roles across businesses of different sizes and sectors. He holds a Certified Public Accountant designation in Canada.TMFdjagielskiRead NextDec 13, 2025 •By Rick OrfordMassive News for Nvidia: A NeurIPS Reveal Could Accelerate the Next Wave of AIDec 13, 2025 •By Adria CiminoMy Top 10 Stocks to Buy for 2026Dec 13, 2025 •By Trevor Jennewine2 Magnificent Stocks to Buy Before They Soar 95% and 215% in 2026, According to Wall Street AnalystsDec 13, 2025 •By Keithen DruryHere's My Top "Magnificent Seven" Stock to Buy for 2026Dec 12, 2025 •By Danny Vena, CPABroadcom CEO Hock Tan Just Delivered Incredible News for Nvidia Stock InvestorsDec 12, 2025 •By Geoffrey Seiler4 No-Brainer AI Stocks to Buy Right Now