WSJ What’s News - Nvidia to Resume AI Chip Sales to China

Episode Date: July 15, 2025

A.M. Edition for July 15. Nvidia says it’s received assurances it can sell its H20 AI chips in China, days after CEO Jensen Huang met President Trump. Beijing bureau chief Jonathan Cheng breaks down how the announcement could tie into broader U.S.-China trade talks. Plus, bank earnings and fresh inflation data are poised to give investors dual snapshots of the state of the economy. And WSJ’s Jack Pitcher explains that while the U.S. dollar’s continued weakness is bad news for American travelers this summer, it’s not the worst thing for U.S. companies this earnings season. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Relief for Nvidia's Jensen Huang as the U.S. OKs the company's sales of AI chips to China. I'm looking forward to shipping H20s very soon. And so I'm very happy with that, with that very, very good news. Plus, it's time for bank earnings in what could be a key test of the market's recent momentum. And sorry, Americans in Europe, we'll look at who's losing out as the dollar slides. It's Tuesday, July 15th. I'm Luke Vargas for the Wall Street Journal,

and here is the AM edition of What's News, the top headlines and business stories moving your world today. We begin with a big win for chipmaker NVIDIA after it said it received assurances from the Trump administration that it can sell its advanced AI chips to China. The news came as NVIDIA CEO Jensen Huang was in Beijing meeting senior officials, and just days after we reported that he directly appealed to President Trump to be able to do business in China and tap into the country's AI talent.

To unpack this turnabout after the Commerce Department restricted sales of Nvidia's H20 chips to China in April, is Wall Street Journal China Bureau Chief Jonathan Chang. John, there is diplomatic subtext all over this story. What can we say about what brought about this announcement? They do a lot of business in China and they want to be able to sell their products But of course the technology that they have the capabilities they have are now a national security asset one that some hawks in the US Are reluctant to allow to fall into China's hands and the China really wants to get its hands on nobody can make or can design The kind of chips that Nvidia does. That's why they are so valuable. But if they were to cut off the Chinese, then that would spur research and development

that could eventually get China in a place where there are companies that could make chips on a par with Nvidia's. So the other half of the argument from Jensen Huang to the US government is to say that you want US technology to be used globally. You want NVIDIA chips to be everywhere. And John, this is coming at a time when trade tensions between the US and China are cooling off. China's second quarter GDP figures came through today and it looks like there's good news there as well. So you could see that China was, when it comes to exports, generally on the same

trajectory as, as it was before President Trump came back to office. The main difference is that US exports, exports to the US have fallen off by quite a bit by double digit percentage points. That shortfall has been made up for more than made up for by other geographies, in particular Africa, in particular, Africa, in particular, Southeast Asia, in particular, Latin America, Europe as well. So that's obviously going to raise some question in the U S about whether or not there are goods that are coming out of China.

They're still arriving in the U S, but they're simply taking a detour. So you can see that trade has not fallen off a cliff for China to the contrary. It's continued to grow. And we know that that export and not fallen off a cliff for China. To the contrary, it's continued to grow. And we know that that export and manufacturing machine is a big part of the reason why China's economy has gotten so big in the first place. Their official target is 5% growth for the year. So if you're talking about 5.4 for the first quarter and 5.2 for the second quarter, you're looking pretty good.

That was the Journal's China Bureau Chief, Jonathan Chang, in Beijing. That was the Journal's China bureau chief, Jonathan Cheng, in Beijing. A number of big US banks are kicking off earnings season this morning, with results due from the likes of JPMorgan Chase, Wells Fargo, Bank of New York, Mellon, and Citigroup, along with the world's largest asset manager, BlackRock. It comes after markets seemed to shrug off President Trump's tariff threats last week, pushing U.S. indexes, London's FTSE 100, and Bitcoin to record highs. But now, investors are seeking clarity from corporate leaders about how the back-and-forth on trade has affected their businesses, worried it will hurt economic growth and corporate

profits when stocks already look expensive. On the latest episode of WSJ's Take on the Week podcast, co-host Tellus Demos explained what we can expect to see from banks big and small. I don't think that those big banks are going to necessarily be feeling it that much. Now, I will say that the large bank stocks have pretty dramatically outperformed, and this is something I'm going to be writing about as we head into earnings, the small bank stocks have pretty dramatically underperformed. And this is something I'm going to be writing about as we head into earnings. The small bank stocks have pretty dramatically underperformed. And I think that's because of what we're seeing in loan growth. When you look at commercial and industrial loan demand, it's just it's not really growing.

And you know, maybe that reflects the fact that people still aren't making big investments in reshoring or whatever we think that might come out of the other side of tariffs. Now that we're through the budget, look, obviously, there's some concerns about the deficit element here. We've seen what's happened with the dollar and the Treasury's market. But from a U.S. economy point of view, you know, big tax cuts coming through, that might be good for the economy, good for businesses. So the bank's commentary, I think, will play into that as well.

And in addition to earnings today, we're also expecting the Labor Department's consumer price index at 830 a.m. Eastern. June's CPI report is likely to show consumer inflation accelerated last month as the Trump administration's tariffs begin to push up prices. So far, inflation data has largely defied fears that Trump's levies will fuel price rises. However, the recent bevy of so-called reciprocal tariffs may muddy the outlook and force the Federal Reserve to stick with its wait-and-see stance for longer.

Coming up, the plunging dollar is making overseas travel more expensive, but could provide a big boost to multinational businesses. We'll survey the winners and losers after the break. After all these years of brewing Core's Original, we've learned one undeniable truth. Any legacy is possible. You just have to start. Core's Original. How will you start your legacy? Celebrate Responsible. Must be have to start. Core is original. How will you start your legacy?

Celebrate Responsible. Must be legal drinkin' age. Here's a trend that American tourists traveling overseas this year may know all too well. The dollar won't get you as far as it used to. Wall Street Journal markets reporter Jack Pitcher has been tracking what's now become the worst first half of the year for the currency in more than 50 years. And he joins me now with more. Jack, over the last few months, we've covered, let's say, the relative declines that the dollar's seen on certain days compared to other currencies. But stepping back, it sounds like we are now in markedly different territory compared to

what had kind of become the norm in the last few years. Tell us what you're seeing. Yeah. So over the first half of the year, a few of the biggest indexes tracking the dollar against other major currencies fell more than 10%. That's a really big move by currency market standards where especially with developed market currencies, the moves tend to be a bit smaller. That is coming from a position of really big strength over the last few years. The dollar had been at multi-decade highs, in part because the US was lifting interest rates, and the US was seen as the most attractive place in the world to invest, and global investors

needed dollars in order to do that. Now we came into January and that dynamic was coming into question a little bit. We have this uncertain trade policy that's expected to have a little bit of a chilling impact on trade. We have more uncertainty over the U.S. deficit situation and concern that those deficits are growing. And as a result, international investors have been buying fewer dollars and the price has been falling. Nat Malkus Jack, we are in the middle of a very busy travel season, obviously. Americans heading abroad, they're going to be paying more for things as a result of the trend we've been talking about here.

The upside though, and then maybe a trend that's more relevant overall, is for American multinational businesses, some tailwinds heading into earnings season potentially. Yes, this can be a positive on a couple fronts, both for American companies and for American investors. On the corporate side, a bunch of U.S. companies have really major overseas businesses. It's actually about 40 percent of the revenues in the S&P 500 come from overseas. A weaker currency can help businesses in two aspects there.

Number one, if they're exporting, their international customers are now going to be able to buy more American products. It's more affordable with the weaker currency. The other factor here is if you're selling things or have businesses in foreign countries, if the dollar is weaker, you're able to bring those profits back

and have them translate into more dollars from your foreign currencies. This is a really big deal for a lot of the biggest US companies, think Amazon, Apple, they have big overseas businesses. And if the dollar goes up as it has a lot over the last few years before 2025, that can have a pretty significant hit to their earnings. This year, we're starting to see the opposite impact. I'm curious for American investors looking overseas,

it sounds like there might be some factors here worth taking into account as well. Yes, another thing that investment advisors are talking about right now is lots of American investors have a very overweight allocation to US stocks. Part of that is preference. US stocks have outperformed for a long time. People like investing at home and part of it is a lack of rebalancing. US stocks have generally outperformed international stocks for most of the last decades and if people

haven't been rebalancing their allocations back into other funds, you might have had a huge overweight to the US by accident. I've talked to a lot of advisors who are saying now is a good moment for people to take a look at their diversification and allocation and consider more international stocks. One thing that does help with that is when you buy an international stock fund or international stocks directly, you tend to need to actually buy those companies

in the foreign currency. Your fund manager is doing this on your behalf. That means when that's converted back to US dollars when you're selling your shares or when your fund is getting priced at the asset value, you can get extra gains from the currency rate when the dollar is falling. That's been pretty stark this year on Vanguard's biggest international fund, for instance. This year, year to date through July, it was up close to 20% in US dollars. About half of that gain came from the actual international stocks being up, and the other half of that gain came from currency appreciation. Finally, Jack, just going back to that recommendation from some advisors that American investors

maybe should be looking abroad now, it sounds like underlying that is sort of an assumption that this trend is going to stick around. Is that the outlook you're hearing? Lots of people do expect the dollar to fall further. There's various factors underpinning that, including the debt situation, including just how strong and by some metrics overbought the dollar had been for several years. That being said, nobody knows what is going to happen next in markets.

These things are really hard to predict and a lot of analysts have been calling for the dollar to fall for years and years and it didn't up until recently. That being said, there are lots of factors here where Wall Street is expecting persistent dollar weakness. I've been speaking to Wall Street Journal Markets reporter Jack Pitcher. Jack, thank you as always for the update. Thank you. And that's it for What's News for this Tuesday morning. Additional sound in this episode

was from Reuters. Today's show was produced by Daniel Bach, Kate Bulevent and Ashar Sukri. Our supervising producer was Sondra Kilhoff And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.