Cramer backs Nvidia selling AI chips in China — but says the stock can thrive either way

CNBC's Jim Cramer said Nvidia should be allowed to sell artificial intelligence chips into China, arguing the U.S. would be better served by keeping Chinese companies reliant on American technology rather than forcing them to develop competing products.

"You force them to build their own chips, they will catch up and with seemingly unlimited electricity, they will surpass us," the "Mad Money" host said Thursday, as Nvidia CEO Jensen Huang was in China alongside President Donald Trump for high-stakes diplomatic summit.

Nvidia's ability to sell advanced AI chips into China has been constrained for years following export restrictions introduced during the Biden administration on national security grounds. Investors have increasingly focused on whether Nvidia will be able to restart meaningful sales into the world's second-largest economy, especially after the company signaled earlier this year that approvals remained uncertain.

"While small amounts of H200 products for China-based customers were approved by the U.S. government, we have yet to generate any revenue and we do not know whether any imports will be allowed into China," Nvidia CFO Colette Kress said during the company's February earnings call.

In March, however, CEO Jensen Huang struck a more optimistic tone, telling reporters at Nvidia's GTC conference that the company had received purchase orders and was restarting manufacturing.

"We have received purchase orders, and we're in the process of restarting our manufacturing," Huang said. "It's different than it was two weeks ago or three weeks ago, but that's our condition today ... and our supply chain is getting fired up."

With Nvidia set to report earnings on Wednesday, investors are eager to see whether the company has any updates on its China business, particularly in light of Huang's participation in Trump's summit. Nvidia's official financial guidance assumes no revenue from China.

At this point, Cramer said he believes the key decision rests less with Washington and more with China. He argued Xi faces a difficult choice: allow companies to buy Nvidia's modified chips and risk deeper dependence on U.S. technology, or push domestic companies to accelerate their own development.

Still, Cramer said Nvidia remains attractive regardless of China because of its dominant position in artificial intelligence and comparatively inexpensive valuation versus peers. That's especially true when evaluating Nvidia against the newly public Cerebras.

"There would be no AI revolution without Jensen Huang and Nvidia," he said. "You buy Nvidia, not for China, not because of the Cerebras IPO, but because it's actually a cheap stock."