Nvidia shares were under pressure as investors weigh the impact of potential new restrictions on AI chip exports to China, but Wall Street is still bullish on the stock. The stock was down about 1% on Wednesday following a Wall Street Journal report that the Biden administration was considering further restricting sales of chips made by Nvidia and others, including A800 chips from Nvidia, which were made specifically for China after an earlier round. restrictions. Several analysts predict that China could account for between 10% and 15% of Nvidia’s data center revenue this year. For Bank of America, this range is between 7% and 10%. The chipmaker reported $1.59 billion in revenue from China, including Hong Kong, in the first quarter of its 2024 fiscal year, accounting for about 22% of its total revenue, according to the company. Although the stock may be under pressure in the short term, “we continue to expect consistent outperformance from NVDA over the medium to long term, given the company’s significant growth opportunities outside of China. “said Toshiya Hari, an analyst at Goldman Sachs. a note on Wednesday, citing opportunities among cloud service providers, consumer internet companies, and other general businesses/enterprises. “We are maintaining our buy rating and would view any stock dislocation as an opportunity to add positions,” he added. “We don’t believe this will derail the bull thesis given the global proliferation of AI and NVDA’s positioning as a key enabler,” Evercore ISI’s Matthew Prisco wrote in a note. “With a more focused approach to restrictions and NVDA’s proven agility, we don’t expect this to be a big deal for NVDA.” Evercore ISI maintained its outperform rating on the title and called the news “a little speed bump on the AI highway.” In the short term, Nvidia should be able to ship the current backlog, Prisco said in Tuesday’s note. Additionally, the company should be able to cut through any headwinds based on “chip structure flexibility”, as it proved when it created the A800 as an advanced chip for the China that adheres to US export restrictions that were revealed last summer. Year-to-date, Citi analysts at NVDA YTD Mountain Nvidia also said they believe demand for AI will outstrip supply this year and that Nvidia “can move its chips.” Bank of America said the strength of U.S. hyperscale customers “could absorb any additional product availability” and that ultimately China will likely represent less than 10% of what it considers a total addressable market of over $100 billion for AI-related accelerator hardware. –With reporting by Michael Bloom
What the Possible US Ban on AI Chips in China Could Mean for Nvidia
