Nvidia, the biggest company in the world by market cap, reported world-beating results yesterday. But export controls to China dampened its data center revenue, making investors nervous.

Why it matters: Nvidia is caught in the middle of a Trump trade war that could affect its earnings growth and the trajectory of the entire stock market.

What they're saying: "We need (China) more than they need us," Paul Meeks, managing director and head of technology research with Freedom Capital Markets, tells Axios.

• Nvidia CEO Jensen Huang sees the Chinese market as a $50 billion opportunity that could increase by 50% per year.
• That's why investors want the doors to that market wide open.

Catch up quick: The Trump administration barred exports of Nvidia H20 chips to China in April.

• The ban was reversed in July after Huang visited the White House and agreed to give a 15% cut of revenue from China chip sales to the U.S.
• Nvidia is still not allowed to sell its most powerful chips to China, though it is urging the U.S. government for approval.

By the numbers: Export controls pressured its data center revenue, which came in just below Wall Street estimates, at $41.1 billion.

• Part of that was due to a $4 billion reduction in H20 chip sales.

State of play: Nvidia CFO Colette Kress said the company would ship between $2 billion and $5 billion worth of H20 chips in the current quarter.

• The company gets half of its data center revenue from large cloud service providers, which happen to be the other biggest names in the S&P 500.
• All of those companies have already committed to record spending on artificial intelligence, which could translate to upside for Nvidia.

Zoom out: Nvidia makes up 8% of the benchmark S&P 500. If export controls impact Nvidia, the effects could reverberate through the entire stock market.

The bond market served as a check on the administration in April, when its sharp reaction forced changes in tariff policy. But bond investors seem asleep at the wheel after President Trump fired Federal Reserve governor Lisa Cook.

Why it matters: The muted reaction could be a sign that bond investors are pricing in an environment where Trump policies don't stick.

What they're saying: "Why is the long end so stable?" writes Krishna Memani, chief investment officer at Lafayette College. "The only possible reason I can come up with is that the Trump TACO thinking permeates bond markets."

• The idea of TACO, or "Trump always chickens out," allowed stock investors to ignore tariff risks.
• Memani thinks the bond market is borrowing the TACO framework.

Between the lines: Bond investors may believe the central bank will retain independence despite Trump's efforts, otherwise we would probably see a larger reaction in yields.

Zoom out: The 10-year Treasury yield has been nearly unchanged since the November 2024 election.

• That has held despite historically high tariff rates, geopolitical uncertainty and declines in the dollar, as well as ongoing threats to Fed independence.

Yes, but: There is some evidence that Wall Street seeks to hedge its bets.

• Demand for puts, or options to sell, on 30-year Treasury bonds picked up after Trump's attempted firing of Fed governor Lisa Cook.
• That means some investors are seeking downside protection.
• This is a trade that would potentially benefit from any further curve steepening that could occur if the central bank is threatened further.

What we're watching: The stock market has yet to face anything that has shaken its complacency. Will the same be true of the bond market?

Editor's note: This story has been corrected to reflect that puts are options to sell (not to buy).

Nvidia is so large that its earnings alone can drive some stocks more than their own earnings can.

Why it matters: These are the corners of the market that often feel the gravitational pull of Nvidia.

Zoom in: Information tech, communication services and energy infrastructure are the sectors that have had historically outsized moves off the back of Nvidia earnings, according to Citi.

• Super Micro Computer, Arista Networks, Vistra and AMD are the four stocks that move the most on an absolute basis alongside Nvidia.
• Utility stocks such as DTE Energy and WEC Energy move more off Nvidia results than their own results, which highlights the degree to which power generation is tied to the AI trade, according to Citi.

The bottom line: With Nvidia under some pressure this morning, expect these names to also be shaky in today's trade.