Imagine you’re sitting at your desk late on a Monday night, half-watching the futures tick, when suddenly your phone lights up with a Truth Social notification that makes you do a double-take.
That actually happened to thousands of traders last night.
President Trump dropped a bombshell: Nvidia can start shipping its cutting-edge H200 AI chips to “approved customers” in China again — provided the U.S. Treasury gets a cool 25% of every sale. Within minutes, Nvidia shares were up more than 2% in after-hours trading and the entire tech complex caught a bid.
In a market that’s been jittery about inflation, rising yields, and the looming Fed decision, this felt like someone just handed risk assets a shot of adrenaline.
A Surprise Thaw in the U.S.-China Chip War
Let’s be honest — almost nobody saw this coming, at least not in this form.
For months the narrative has been simple: Washington tightens the screws on advanced semiconductors heading to China, Nvidia scrambles to create watered-down versions for the Chinese market, and Beijing retaliates with its own restrictions. Rinse and repeat.
Then, out of nowhere, a deal materializes that lets Nvidia ship its actual flagship H200 — the same chip powering the global AI boom — while the U.S. government essentially takes a 25% royalty. Trump called it a “win for National Security and American companies.” Xi Jinping reportedly responded positively.
Whether you love the move or hate it, you have to admit it’s classic Trump: unconventional, headline-grabbing, and impossible to ignore.
“This deal allows for continued strong National Security while letting American technology lead the world.”
– President Donald Trump, Truth Social, Dec 8 2025
In my view, this isn’t just about chips. It’s a signal that the second Trump administration intends to run trade policy like a private-equity deal: extract maximum cash flow while maintaining leverage. Call it “America First 2.0” if you want.
Why the H200 Matters More Than You Think
The H200 isn’t some incremental upgrade. It’s Nvidia’s current king-of-the-hill AI training chip — roughly 1.4× faster than the H100 in many workloads and with double the memory bandwidth. Every major cloud provider and AI lab has been fighting to get their hands on them.
China, despite domestic efforts, still relies heavily on Nvidia architecture for frontier AI development. Blocking the H200 entirely would have slowed Beijing’s progress — but it also meant Nvidia was leaving tens of billions on the table.
Now that door cracks back open, with guardrails. Approved customers only (read: not military-linked entities), and Uncle Sam gets paid handsomely. It’s a pragmatic middle path nobody in Washington was openly discussing a week ago.
Immediate Market Reaction: Tech Loves It
The after-hours move told you everything you needed to know about sentiment.
- Nvidia +2.2% instantly
- AMD +1.8%
- Broadcom +1.5%
- Even non-chip names like Microsoft and Meta ticked higher on the AI demand implication
By Tuesday morning pre-market, S&P 500 futures were up 0.15%, Nasdaq futures almost 0.3%. Not earth-shattering, but a clear pivot from the mild risk-off tone we carried into the weekend.
Tech was the only S&P sector that closed green on Monday’s regular session, led by — you guessed it — semiconductors. Broadcom tacked on nearly 3% during the day on separate news that Microsoft is exploring custom silicon with them. When the Trump post hit, it felt like the sector got rocket fuel poured on an already smoldering fire.
The Bigger Picture: Three Forces Colliding This Week
Here’s where things get really interesting. This Nvidia news didn’t land in a vacuum. Three massive macro forces are slamming into each other over the next 72 hours:
- The Fed Decision (Wednesday) – 89% probability of a 25 bps cut, but everyone is obsessing over the dot plot and Powell’s tone
- Major AI Earnings – Oracle reports Tuesday after close, Broadcom on Thursday
- Geopolitical Wildcard – The Nvidia-China deal and whatever ripple effects come next
Throw in still-elevated 10-year yields (hovering near 4.3%) and sticky inflation prints, and you’ve got the ingredients for serious volatility.
I’ve been doing this long enough to know that when geopolitics, monetary policy, and mega-cap earnings all collide in the same week, the market rarely stays quiet.
What the Fed Is Actually Wrestling With
Everyone expects a quarter-point cut Wednesday. The debate is about 2026.
Core PCE came in softer than feared last week, but shelter costs are still running hot, wage growth remains firm, and tariff talk is back on the table. Add in the longest government shutdown on record delaying key data, and Powell has a legitimate fog-of-war problem.
“While a rate cut feels almost certain, the Fed’s economic projections and Chairman Powell’s commentary will play a big role in how markets react — not only this week, but possibly set the tone for the remainder of the month.”
– Bret Kenwell, U.S. investment analyst at eToro
Risk-on traders are praying Powell keeps the dovish door cracked open. Any hint of “pause” or “data-dependent hawkishness could trigger a sharp pullback — especially with yields already elevated.
Earnings Calendar: AI Heavyweights Step Up
This week isn’t just about the Fed. We get reports from two companies that sit at the heart of the AI infrastructure build-out:
- Oracle (Tuesday after close) – Cloud growth acceleration will be the headline number to watch
- Broadcom (Thursday after close) – AI chip revenue guidance could make or break the semiconductor rally
- Retail names like Costco and Lululemon round out the week, giving a consumer health check
If both Oracle and Broadcom smash expectations and guide aggressively, the Nvidia news becomes jet fuel. If they disappoint, we could quickly flip to “sell the rumor, buy the news” exhaustion.
So… Buy the Dip or Take Profits?
Look, I’m not here to give clickbait-level trading advice, but here’s how I’m thinking about it personally.
The path of least resistance for tech and growth stocks into year-end still looks higher — provided Powell doesn’t slam the door and the China deal doesn’t immediately unravel.
Seasonality is strongly bullish in December, positioning is relatively light after the October-November scare, and cash on the sidelines remains elevated. Those are powerful tailwinds.
On the flip side, valuations are stretched, yields are rising, and geopolitical risk never really goes away. One inflammatory tweet (from either side of the Pacific) could change the mood overnight.
My base case: we grind higher into Christmas, with 5500–5600 on the S&P looking realistic if the stars align. But I’ll be watching Nvidia’s gap fill around $148–150 as potential entry if we get a post-Fed pullback.
Either way, strap in. This week has all the ingredients to be one of the most memorable of 2025 — and we’re only in December.
Whatever happens, one thing feels certain: the AI boom isn’t slowing down, and the U.S. just found a creative new way to monetize its technological edge.
Whether that’s ultimately good policy or dangerous precedent, only time will tell. For now, the market voted with its wallets — and it voted green.
