Nvidia’s (NVDA) announcement of a $5.5 billion charge in Q1 due to U.S. export restrictions on its H20 AI chips has drawn reactions from Wall Street analysts. Following the news, NVDA stock dropped over 6% in the after-hours trading. While analysts see short-term challenges due to these restrictions, they remain optimistic about NVDA’s long-term prospects in the AI sector.
Analysts Reiterate Buy Rating amid Near-term Headwinds
Bank of America (BAC) analyst Vivek Arya sees the $5.5 billion charge as a sign of future restrictions on H20 chips and limited chances of future licenses. Also, Arya estimates this could result in a 20% hit to Q1 GAAP EPS but sees a smaller impact on non-GAAP metrics. The analyst said the overall risk from the restrictions is “manageable” and maintained a Buy rating on NVDA stock with a $160 price target.
Meanwhile, Raymond James (RJF) analyst Srini Pajjuri cut the firm’s price target to $150 from $170 but reiterated a Buy rating. He noted that China made up 14% of Nvidia’s Q4 sales, with a major contribution from H20 chips.
Further, Pajjuri believes NVDA’s move to take the $5.5 billion hit indicates the company’s low expectations of getting licenses. As a result, the analyst lowered his near-term estimates for Nvidia. Despite this, Pajjuri remains optimistic due to continued strong AI spending among hyperscale customers, supporting a positive long-term outlook.
Simultaneously, Citigroup (C) analyst Atif Malik noted Nvidia’s 6% drop in share price after the announcement and said the $5.5 billion charge could hurt near-term guidance. However, Malik kept his estimates for NVDA’s AI unit and total sales unchanged, having already accounted for the impact of broader export restrictions. Also, the analyst believes Nvidia’s current valuation reflects these risks. He maintained a Buy rating with a $150 price target.
Is NVDA a Strong Buy?
Turning to Wall Street, NVDA stock has a Strong Buy consensus rating based on 37 Buys and four Holds assigned in the last three months. At $173.11, the average Nvidia stock price target implies a 54.29% upside potential.
