U.S. Reverses Nvidia AI Export Ban as China’s DeepSeek Closes AI Gap at Fraction of U.S. Costs

By Douglas A. McIntyre Published Jul 17, 8:02AM EDT

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China proved that it has AI capabilities close to those of U.S. industry leaders.
And it has done it without wide access to the world’s most powerful AI chips.

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U.S. Reverses Nvidia AI Export Ban as China’s DeepSeek Closes AI Gap at Fraction of U.S. Costs — © Deagreez / iStock via Getty Images

Back in April, the U.S. government banned Nvidia’s H20 AI exports to China. As of July 15, the government has reversed its decision. The company is now legally allowed to file for export licenses. This change comes after the crucial London meeting between Chinese and U.S. officials, and following China’s easing of rare earth export controls, upholding their end of the bargain. This news caused Nvidia’s stock to surge 4%. Despite the good news for Nvidia, many are concerned over national security matters, saying the chips could enhance China’s AI military capabilities.

It has been widely assumed that the United States was the leader in global artificial intelligence (AI) technology by far. Private AI companies, which include OpenAI and xAI, have raised tens of billions of dollars in the past year. The future profit engines for companies like Microsoft are built on their ambitious AI strategies. Some of these plans were blown away as China proved that it has AI capabilities close to those of U.S. industry leaders. Moreover, those capabilities came at a fraction of what American companies have invested.

The name of China’s new AI venture is DeepSeek. Training its most recent AI projects costs a tiny fraction of what major Western AI companies need to invest for similar results. Now, China has access to the world’s most powerful AI chips, most of which Nvidia Corp. (NASDAQ: NVDA | NVDA Price Prediction) makes.

This post was updated on July 17, 2025 to include the government’s decision on AI exports to China.

The Future of AI

Is DeepSeek the future of artificial intelligence?

Reviewing the latest DeepSeek product, long-time Silicon Valley VC Marc Andreessen posted on X, “Deepseek R1 is one of the most amazing and impressive breakthroughs I’ve ever seen — and as open source, a profound gift to the world.”

This has suddenly upended America’s worldview of the future of AI. If China can build advanced AI models without the world’s most sophisticated chips, the thesis about Nvidia’s market value is flawed. Its market cap, which recently topped $4 trillion and makes it the most valuable company in the world, is much too high.

The DeepSeek news dropped Nvidia’s stock by over 12%. Further proof that China does not need its products can only make that worse. It will also raise another question. Do companies like Microsoft and OpenAI need Nvidia products to keep them at the top of the AI industry?

It is still a matter of debate about whether the DeepSeek software is as good as the best products from industry leaders like OpenAI. However, enough tech industry leaders have posted opinions that DeepSeek has largely closed the AI gap between China and the United States. If that is true, Nvidia’s problems will deepen as DeepSeek continues to get better.

Prediction: Meta Platforms Will Be Worth More Than Nvidia in 2028

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.