NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) formally launched a China-specific lower version of its most powerful gaming chip, which complies with the U.S. restrictions on the company’s export of advanced artificial intelligence (AI) chips to that country.

The graphic chip maker unveiled RTX 4090D on Thursday, which is available for sale on its China website. The newly launched graphic processing unit (GPU) has a reduced AI inference performance than the RTX 4090 sold in other countries.

According to a Bloomberg report, the chip has approximately 10% fewer processing cores than the RTX 4090. NVIDIA has also undertaken measures to prevent end-users from modifying the China-specific chip into a regular RTX 4090.

NVIDIA Caught in the US-China Tech War

Over the past year, President Joe Biden's administration has been imposing trade restrictions to restrict China from getting its hands on cutting-edge technologies that can strengthen its military. Last year, the U.S. government restricted NVIDIA from selling its A100, A100X and H100 integrated circuits to China and Russia. It also banned the company from exporting DGX or other systems using A100 or H100 integrated circuits.

In October 2023, the Biden administration imposed fresh restrictions on the sale of AI chips and manufacturing equipment to China. The newly expanded restrictions have blocked NVIDIA from selling two AI chips — A800 and H800 — specifically created for the Chinese market following last year’s export curb.

NVIDIA had cautioned that the restrictions may hurt its business in China. In a filing with the Securities and Exchange Commission, the company revealed that it may be forced to discontinue its business operations from countries on the U.S. government’s export restriction list. The rules are expected to impact NVDA’s ability to support its existing customers and complete the development of certain products in a timely manner.

However, by launching the less powerful version of RTX 4090, which complies with all US restrictions, this Zacks Rank #2 (Buy) company will be able to boost its sales in China. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GenAI Investment Aids NVIDIA’s Growth

NVIDIA has witnessed a remarkable run, showcasing a staggering 243% year-to-date surge in its stock price. The company also achieved a massive milestone in May 2023 by joining the exclusive club of companies with a $1 trillion market capitalization.

NVIDIA’s robust stock price performance has been primarily driven by hopes that the company will be a prime beneficiary of growing investments in generative AI. The company dominates the market for AI chips. The meteoric rise of OpenAI’s ChatGPT and its adoption among enterprises have already proven generative AI technology’s usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.

However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.

NVIDIA’s next-generation chips with high computing power can be the top choice for enterprises. The company’s GPUs are already being applied in AI models. This is expanding NVDA’s footprint in untapped markets like automotive, healthcare and manufacturing.

The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. Considering surging AI investments across the data center end market, NVDA expects its fourth-quarter fiscal 2024 revenues to reach $20 billion from $6.05 billion in the year-ago quarter.

Other Companies Banking on AI Investment

As organizations pivot toward digital transformation, AI investments are set to soar in the coming years, becoming pivotal to staying competitive in the digital landscape. The latest projection from the International Data Corporation forecasts a monumental surge, estimating global AI spending to surpass $300 billion by 2026, indicating a remarkable compound annual growth rate (CAGR) of 27% from 2022 to 2026.

Tech behemoths like Meta Platforms, Inc. (META Quick QuoteMETA - Free Report) , Intel Corporation (INTC Quick QuoteINTC - Free Report) and UiPath Inc. (PATH Quick QuotePATH - Free Report) are seizing the immense potential of the AI sector.

Meta is amplifying its presence in the AI realm with the groundbreaking Large Language Model Meta AI, or "Llama." Collaborating with Microsoft, Meta introduced Llama 2, the next-gen iteration, and Code Llama, an AI model proficient in generating and discussing code using text prompts. This Zacks Rank #2 company is set to launch Meta AI in beta — a sophisticated conversational assistant slated for integration across WhatsApp, Messenger and Instagram, extending to their Ray-Ban Meta smart glasses and Quest 3.

Intel made a significant shift by launching AI chips for data centers and personal computers in 2023 — a strategic leap in more than four decades. This move targets a robust foothold in the expansive AI domain, spanning cloud, enterprise servers, network infrastructure and edge computing — an alignment with the ever-evolving market trends. The upcoming Intel Gaudi3 chips, slated for release in 2024, signify this Zacks Rank #3 (Hold) company's focus on advancing AI accelerators, catering to the growing demand for generative AI models and deep learning applications.

UiPath is enhancing its platform with AI-centric services to foster top-line growth in 2024. These include augmentations to existing AutoPilot services and broader cross-platform connectivity options. This Zacks Rank #2 company's Clipboard AI, recognized as one of TIME's Best Inventions of 2023, streamlines operations by eliminating manual copy-pasting.