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January 16, 2026, 9:12 AM EST. Nvidia's China business faces geopolitical headwinds that could erode its edge. Revenue in China (including Hong Kong) fell 45% year over year to about $3 billion in the latest quarter, while overall quarterly sales rose more than 60% to about $57 billion. Even as the U.S. approved export of the H200 to China with a 25% tariff, imports remain restricted, underscoring lingering tensions. Analysts warn a faster build-out of domestic chips and open-source AI software in China could blunt Nvidia's CUDA-centric software stack, raising switching costs and narrowing its hardware lead. Seaport's Jay Goldberg calls that the 'real nightmare scenario.' Tech analyst Bob O'Donnell notes success now hinges on software and models, not GPUs alone.