# $35 billion in Nvidia orders from China's tech giants while AI stocks are beaten down — buy the dip

_AI-generated trading idea · BULLISH · CSCO, NVDA_

> Canonical page: https://commonquant.ai/research/for-you/35-billion-in-nvidia-orders-from-china-s-tech-giants-while-a--547f4db9-3a2f-521f-94ef-57ee74c38542

The recent AI stock sell-off has been driven by doubts that the enormous spending on AI infrastructure will ever pay off. But a $35 billion order from three of China's largest tech firms is hard evidence that real customers are still queuing up for Nvidia's chips with cash — demand, not just hype. Tom Lee's point that past technology panics (like Cisco's after the dot-com crash) eventually resolved in favor of quality suppliers supports buying the dip rather than fleeing it. If actual orders keep flowing while sentiment stays fearful, Nvidia is the most direct way to own that gap between fear and fundamentals.

## Idea

The recent AI stock sell-off has been driven by doubts that the enormous spending on AI infrastructure will ever pay off. But a $35 billion order from three of China's largest tech firms is hard evidence that real customers are still queuing up for Nvidia's chips with cash — demand, not just hype. Tom Lee's point that past technology panics (like Cisco's after the dot-com crash) eventually resolved in favor of quality suppliers supports buying the dip rather than fleeing it. If actual orders keep flowing while sentiment stays fearful, Nvidia is the most direct way to own that gap between fear and fundamentals.

## Advanced Analysis

### Verdict: the demand story is real, but the entry hasn't fired — wait

The idea's core demand claim is genuinely testable and currently supported: the Reuters report of over $35B in Nvidia chip orders from ByteDance, Alibaba, and Tencent, combined with NVDA's fiscal Q4 showing 73.2% year-over-year revenue growth and an operating margin in the 99.3rd percentile among IT peers, makes this one of the few AI-dip theses backed by checkable fundamentals. The strongest point against it is the freshest data: NVDA's fiscal Q2 (ended 2026-07-26) shows free cash flow down 56% sequentially to $21.4B, net margin compressed 9.4 points to 62.0%, and the provisional 2026-09-30 ownership filings show roughly $569M of net insider selling at NVDA and $13.1M at CSCO — the people closest to the business were sellers. The completed 60-month backtest returned 14.9% over 191 trades with a 10.3% worst drawdown (the 12-month window lost 1.3%, so the edge is regime-dependent), but no robust parameter setup was formally recommended because the sensitivity evaluation exceeded its time budget. Today the strategy has literally nothing to buy: NVDA closed at $216.12 versus the required 9-day average of $222.30 and an RSI of 31.8 versus the required above-45, with $210 as the tactical invalidation level. The verdict that flips this idea is a strong NVDA fiscal Q3 print in late November that extends the $35B order thesis and repairs momentum — until then, wait.

#### Conviction score breakdown

Composite score computed by the server from the applicable evidence-tier dimensions.

| Measure | Value |
| --- | ---: |
| Thesis support | 72/100 |
| Trade readiness | 30/100 |
| Risk quality | 55/100 |
| Backtest evidence | 62/100 |
| Fundamentals trend | 45/100 |
| Score | 53/100 |
| Composite Score | 53/100 |
| Evidence Tier | backtested |

#### Decision scenarios

Bull, base, and bear cases synthesized from the cited evidence tier. Likelihoods are rounded evidence-weighted judgments, not statistically calibrated forecasts.

| Measure | Value |
| --- | ---: |
| Evidence Tier | backtested |

### Trade now: on the sidelines while NVDA rebuilds its trigger

\*\*Nothing to buy today.\*\* NVDA closed at $216.12, which is $6.18 below the 9-day moving average of $222.30 that the primary entry rule requires. The 14-day RSI sits at 31.8, well short of the required level above 45 — the biggest gap to close. The MACD line is already curling toward its signal line, so that condition is near, and price is holding above the nearest support at $210. In plain terms: two of the entry conditions are close, and the momentum gauge is the one that is not.

The same setup applies to the CSCO leg: CSCO closed at $106.50 versus its 9-day average of $111.06, with an RSI of 30.8 against the same above-45 requirement. Note that both tickers currently sit below their 9-day averages — the exact condition that fires the exit rule — so even an existing position would be flagged for review, not held. "Wait" here means literally that: no new longs until price closes above the 9-day average \*and\* the RSI is back above 45 \*and\* the MACD line crosses above its signal line.

The completed backtest supports waiting rather than forcing it. Over 60 months the pair strategy traded 191 times, won 47.6% of trades, returned 14.9% with a worst peak-to-trough drawdown of 10.3%; the 24-month window did better on return (15.7% across 86 trades). Position sizing is fixed-risk at roughly 2.5% per trade with a hard 2.5% stop-loss and a 5% take-profit, capped at 25% of the account per position. Once the trigger fires, the reward-to-risk on any new entry is about 2:1 by construction — but it only exists once the entry conditions line up.

One caution on the tape: NVDA is 9.7% below its range high and 31% above its range low, with the nearest resistance at $216.83 — right where it closed. A bounce from here would still need to clear the $222 average before the strategy can act.

#### CSCO price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | CSCO |
| Timeframe | 1d |

#### NVDA price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | NVDA |
| Timeframe | 1d |

### Orders, Not Hype: The Fundamentals Back the Fear-Gap Trade

The idea's core claim — that real orders are outpacing sentiment — is the easiest part of this thesis to test against the numbers, and Nvidia's latest reported quarter (fiscal Q4, period ending 2026-01-25) supports it directly. Revenue of $68.1B represents 73.2% growth year over year, and the full fiscal year came in at roughly $215.9B. Net income of $43.0B on a 63.1% net margin is not what a hype cycle produces when the crowd turns fearful — it is what a company with pricing power produces. Nvidia's operating margin of 65.0% sits in the 99.3rd percentile among 899 Information Technology peers, and free cash flow of $34.9B ranks in the 99.5th percentile. The thesis argues that demand, not narrative, is the driver; that is exactly what these percentile rankings show relative to the sector. The Reuters piece on the $35B order from ByteDance, Alibaba, and Tencent gives the bullish case a forward-looking catalyst on top of the backward-looking fundamentals. Per that report, three of China's largest tech firms placed over $35 billion worth of Nvidia chip orders — cash-backed demand from customers who could, in principle, buy elsewhere. In a value-oriented profile where the question is whether AI infrastructure spending pays off, an order book of that size is a concrete answer to the 'will anyone pay for this?' doubt the market has been pricing. The Cisco comparison, per the MarketWatch piece citing Tom Lee, adds a historical frame: past technology panics eventually resolved in favor of quality suppliers. Cisco's own numbers today partly vindicate that view of quality surviving the panic — its fiscal Q4 (ended 2026-07-25) revenue of $17.3B grew 17.6% year over year, free cash flow of $5.0B ranks in the 99.0th peer percentile, and it has raised its dividend steadily from $1.51 per share in 2022 toward $1.67 in 2026, roughly 2.5% annual growth. The quality-supplier thesis is not just a narrative; the companies it names are showing the cash generation to match. On the backtest evidence itself — this idea's realized, completed test of the NVDA/CSCO rule set returned 14.9% over 60 months across 191 trades, with a 47.6% win rate and a worst peak-to-trough drawdown of 10.3%. The 24-month window performed similarly (15.7%…

#### NVDA Debt to equity

Debt to equity trend from CommonQuant fundamentals/XBRL data; +173.8% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2020-01-26 | \0.16314323172730252 ratio |
| 2020-10-25 | \0.4539585235424547 ratio |
| 2021-01-31 | \0.41218256082400995 ratio |
| 2021-05-02 | \0.3708852668584212 ratio |
| 2021-08-01 | \0.5647609590012768 ratio |
| 2021-10-31 | \0.459870577359442 ratio |
| 2022-01-30 | \0.4113182023147452 ratio |
| 2022-07-31 | \0.459058320405853 ratio |
| 2022-10-30 | \0.5129045856948803 ratio |
| 2023-01-29 | \0.49558843491244736 ratio |
| 2023-04-30 | \0.4467373572593801 ratio |
| Latest Value | \0.4467373572593801 ratio |
| Change Pct | \173.83137659434826 ratio |
| Ticker | NVDA |
| Timeframe | reported periods |

#### NVDA Free cash flow

Free cash flow trend from CommonQuant fundamentals/XBRL data; -97.2% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2010-01-31 | $410206000 |
| 2011-01-30 | $577907000 |
| 2011-05-01 | $141005000 |
| 2011-07-31 | $58698000 |
| 2011-10-30 | $205382000 |
| 2012-01-29 | $770421000 |
| 2012-01-29 | $365336000 |
| 2012-04-29 | $-38131000 |
| 2012-07-29 | $138942000 |
| 2012-10-28 | $136801000 |
| 2013-04-28 | $109983000 |
| 2013-07-28 | $11483000 |
| Latest Value | $11483000 |
| Change Pct | $-97.20067478291396 |
| Ticker | NVDA |
| Timeframe | reported periods |

#### CSCO sector percentile check

Ranks CSCO against 833 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | \99.03961584633852th percentile |
| Operating margin | \93.5483870967742th percentile |
| Revenue growth (YoY) | \70.30033370411569th percentile |
| Gross margin | \64.34782608695652th percentile |
| Ticker | CSCO |
| Sector | Information Technology |
| Peer Count | 833 |

### Scores

- **Conviction score breakdown:** 53
- **Thesis support:** 72
- **Trade readiness:** 30
- **Risk quality:** 55
- **Backtest evidence:** 62
- **Fundamentals trend:** 45

### Watch items

- **NVDA — RSI (14)**
- **NVDA — Close vs 9-day EMA**
- **NVDA — Nearest support level**
- **NVDA — Fiscal Q3 earnings report**
- **NVDA — Net insider open-market activity (next 13F/ownership filing)**
- **NVDA — Free cash flow, quarter over quarter**
- **CSCO — RSI (14)**
- **CSCO — Close vs 9-day EMA**
- **CSCO — Fiscal Q1 earnings report**
- **CSCO — Net insider open-market activity (next ownership filing)**

## Key details

- Symbols: CSCO, NVDA
- Timeframes: 1d
- Tags: \#canonical-demand, \#cluster-version:1, \#direction:bullish, \#entity-kind:instrument, \#entity:CSCO, \#entity:NVDA, \#horizon:unspecified, \#intent:research, \#symbol:CSCO, \#symbol:NVDA

## Community

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- Views: 1
- Copies: 0
- Cosigns: 0

## News sources

- [EXCLUSIVE: ByteDance, Alibaba, Tencent place over $35 billion worth of Nvidia chip orders - Reuters](https://news.google.com/rss/articles/CBMizgFBVV95cUxQOXBuUld1bXhxNWlQNktuUmYxOWpVRFlnN0dialpvZlhYM1JLVzE1N0VBSUVNbUlCNmwtN2RVWXRkd1VUV3BRSV9aMGJGMkpxQUk4VWZ1dUt5YjZpdmthQVZ3REFHUzBmV3B0SFJwOFFsMl9fb3l0Y3F0Z1FXbDAxSFhTbV9peVVDQ3FKRnp3NjVDdEpRVHdIOG04SjctLWRRTzN2bDM1a2QxaGdZMHlJV0hGS1FObHFKTVNiS3hvXzZsUzdvMktteFBvSGNEZw?oc=5) — Reuters
- [Strategist Tom Lee says he’s buying the AI stock dip, and Cisco holds the key](https://www.marketwatch.com/story/strategist-tom-lee-says-hes-buying-the-ai-stock-dip-and-cisco-holds-the-key-33233a9d?mod=mw_rss_topstories) — MarketWatch

## Related

- [CSCO trade ideas](https://commonquant.ai/markets/csco)
- [NVDA trade ideas](https://commonquant.ai/markets/nvda)
- [Latest market news](https://commonquant.ai/news)

## About CommonQuant Research

Ideas and Advanced Analysis are generated with fresh, LLM-selected news headlines and grounded in SEC XBRL fundamentals and peer percentiles. Strategies built from these ideas are automatically backtested (over a timeframe-dependent historical window with walk-forward tuning) and stress-tested before they can go live, then monitored against the news hourly while they run.