A short-seller takes aim at record-high Nvidia stock over its 'China problem'
Nvidia stock is trading at record highs, but one short-seller unveiled its bullish bet against the chipmaker and its short position on the stock.
Culper Research, an activist short-focused research firm, unveiled its short position in Nvidia and outlined its bearish outlook for the stock. The 40 page report titled, "The China Problem," claims that part of Nvidia's recent massive revenue growth has been driven by China sales despite the company saying it had exited the country.
"Nvidia claims that its business in China went to 'zero' after April 2025 U.S. trade restrictions. We believe that in reality, over 20% of Nvidia's FY 2026 compute revenues remained driven by China — supported both by illegal GPU diversion and Southeast Asian intermediaries," the short-seller said.
However, more relevant for investors may be Culper's prediction that China is on the verge of "cutting out" Nvidia at a time when many analysts are highly bullish about the chip maker's return to the market. Wells Fargo wrote in March, for instance, that China could drive $25 billion per year of revenue for Nvidia.
"We think it's the exact opposite. As Nvidia never truly left China and Beijing now clamps down on the Company in favor of domestic alternatives, China represents a massive air gap to Nvidia's FY 2027 / CY 2026 numbers," the firm wrote.
To back up its view, Culper cited a handful of recent developments that suggest China prefers to foster domestic chip production, including regulatory action against Nvidia in 2025, and a quote from White House tech advisor David Sacks in December stating China is "rejecting our chips."
"We believe Nvidia is now actually losing the business that Jensen claimed the Company lost a year ago," the short report reads.
Culper's report was released while Nvidia CEO Jensen Huang was in Beijing for the US-China summit with US President Trump.
Huang, along with Elon Musk, Tesla CEO and former DOGE head, flew to China on Air Force Once with Trump.
Nvidia stock is trading at record highs, with investors seemingly unfazed by the short-seller's claims and reading Huang's presence in China as a positive sign.
"We recognize the stakes. Nvidia holds the single largest market capitalization on the planet, while CEO Jensen Huang has been celebrated as a generationally talented operator," Culper said, adding "This is not a bet against AI. We are short Nvidia for one reason: the Company has a significant China problem."
Culper said that Nvidia has continued to indirectly supply China despite US export restrictions through entities tied to Alibaba diverting its products. These include Singapore-based Megaspeed and Apex, as well as Malaysian Speedmatrix and Taiwan's Giga Computing.
Nvidia and Alibaba did not immediately respond to Business Insider's request for comment.
"We've chased down every single concern. And we've repeatedly tested and sampled data centers around the world and found no diversion," Nvidia CEO Jensen Huang said in a Bloomberg interview in late 2025.
The US government reported shutting down an illegal AI tech smuggling ring in late 2025, after with officials calling out some of the companies named in the Culper report to be investigated. Super Micro Computer, for instance, was caught up in a chip smuggling operation earlier this year.
