Buy This, Not That: Trump’s China Chip Deal – Who Wins?

Shah Gilani|August 13, 2025

President Trump just pulled off something nobody saw coming…

He negotiated a 15% payout on Nvidia and AMD chip revenues from China sales.

This surprise deal essentially gives both companies licenses to export semiconductors to China – chips the Chinese desperately want for its AI programs.

Which stock benefits more from this unexpected export opportunity?

The answer might surprise you.

One company keeps hitting new highs. The other has a market cap of just $280 billion and posted 229% earnings growth…

I’ll tell you which chip giant I’m backing – and why massive earnings growth doesn’t always mean “buy.”

Click on the thumbnail below to get my take.

Transcript

Hey, everybody, Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

I’m coming to you from the Fort Lauderdale airport on my way back to New York. Hope you’re all doing well.

Today, I’m going to pit Nvidia against AMD. Yes, the 800-pound gorilla – actually a $4.4 trillion valuation company – against AMD, a $279 to $280 billion market cap company.

It’s got nothing to do with their market caps. What it has to do with is President Donald Trump has essentially talked them – negotiated them – down from 20% to a 15% payout of the revenues that they produce selling chips to China.

Now this deal, which really looks like an export tax to me, essentially allows both AMD and Nvidia licenses to export semiconductor chips to China, which the Chinese want. The Chinese want them for the advancement of their AI programs, even though they’re doing pretty well on their own.

They specifically like to get the Blackwell chip from Nvidia and AMD’s top chips, but these licenses don’t allow those chips to be sold to China. They allow AMD’s MI308 chip and they allow Nvidia’s H20 chip to be sold to China.

So what does that do for the stocks? That’s the question everybody wants to know.

Does this make both of them major players in the export market to China of all kinds of chips, but especially their second-tier – not the worst, but second-best level of chips – which the Chinese want? I don’t know how much they really want them.

So the question is, which is a better stock to buy? Because a lot of investors are trying to figure out whether they should buy Nvidia or AMD to take advantage of the additional sales that they’re going to see to China.

So here’s my opinion. First of all, let’s take a look at the charts. I’m going to pull up an AMD chart here for you guys.

Here’s a two-year chart of AMD.

The only problem I have with AMD here is that this is the old high way back here. Seems like way back, in March of 2024, and the intraday high there was $227. The stock’s at $174.95 as of Tuesday’s close. Now, it’s a nice move up since April, but nothing that impressive.

Well, here’s the chip news the other day, and the stock really hasn’t done a whole lot. So yes, there was a lot of hope that AMD would move a lot better than Nvidia on that news in that they had more to gain because the stock hasn’t performed as well. Well, I don’t see it that way. I see the stock is underperforming Nvidia, but it doesn’t matter what I think – it’s what you think.

And for a lot of you, AMD is playing catch-up, and that gives us a great opportunity. The balance sheet is great, by the way. We’ve got $5.87 billion in cash, $3.89 billion in debt. So the balance sheet’s solid. Operating cash flow, levered free cash flow – all really good there.

Quarterly revenue growth, 31% year over year. Quarterly earnings growth, 229%. Quarterly earnings growth on a year-over-year basis, 229%. So that’s why people think AMD is picking up some momentum here.

But ROE – return on equity – 0.7%. I’m sorry, I’m unimpressed by this. This is a company that’s got $29.6 billion in revenue and a profit margin of 9.57%. Yeah, I like AMD’s stock, but not compared to Nvidia.

Yes, Nvidia isn’t going to be selling its Blackwell chips to China, but it will be selling its H20s if this deal goes through. And it may not even go through. So that’s another reason I like Nvidia over AMD. If I want to own just one or the other, I would buy Nvidia. Yes, it’s just made another new high. It’s been on a tear.

Here’s the two-year chart of Nvidia.

And this just performed a lot better. And this is obviously since April – this thing has shot up, continues to make new highs, and just looks better. Yes, it got overbought, but it continues to go up all the way while it was overbought.

So when it comes to this potential chip deal – the ability for Nvidia and AMD to sell chips to China – I’m going to say buy Nvidia, not AMD.

Catch you guys next week. Cheers.