Following months of uncertainty around export restrictions, Nvidia (NASDAQ:NVDA) might be about to regain its footing in China. In a blog post last night, the chip giant announced that it expects to resume H20 sales to China.
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The news, says Bernstein Stacy Rasgon, an analyst ranked amongst the top 2% of Street stock experts, came as a “welcome surprise.” That said, Rasgon points out that the “exact wording was that ‘NVIDIA is filing applications to sell the NVIDIA H20 GPU again’ and that ‘the U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon’ which (given the administration’s history) is not necessarily100% the same as ‘H20 licenses have absolutely been granted.’” However, the 5-star analyst does think this “seems close enough.” There was also an announcement of a “fully compliant” RTX PRO GPU.
Recently, CEO Jensen Huang has been “carefully cultivating” Trump and key members of the administration, while also clearly outlining the potential downsides of keeping the ban in place – so the analyst is encouraged to see a more pragmatic approach winning out.
Nvidia previously indicated it could lose around $8 billion in revenue this quarter alone due to the restrictions. With just two weeks left in FQ2, Rasgon thinks it’s unlikely they’ll be able to ship much before the quarter ends. However, there could be a meaningful rebound in the second half, potentially including a partial reversal of the $4.5 billion inventory reserve the company had taken. That said, it remains unclear whether all customers tied to the $8 billion figure will ultimately secure licenses. Still, every ~$10 billion in recovered China revenue would add roughly $0.25 to EPS. So if Nvidia is able to recapture $15–$20 billion over the remainder of the fiscal year, it could translate into a $0.40–$0.50 EPS boost for FY2026 – potentially more than 10% upside versus current Street estimates.
Beyond the potential rebound in revenue and earnings, the analyst is happy to see Nvidia maintaining at least a foothold in the Chinese market, as this helps reduce the risk of more structural, long-term challenges. Rasgon has always viewed the H20 ban as unnecessary – and as “somewhat nonsensical” – given that the chip’s performance is already limited and lags behind several Chinese alternatives. Blocking it would have effectively handed the AI market in China to Huawei, while also accelerating the development of domestic alternatives – some of which could eventually find their way beyond China’s borders. “Allowing NVIDIA to compete in China (even with constrained parts) should help them at least preserve their ecosystem advantages,” the analyst further said.
To this end, Rasgon maintained an Outperform (i.e., Buy) rating on the shares along with a $185 price target. There’s potential upside of 13% from current levels. (To watch Rasgon’s track record, click here)
Looking at the Street’s overall take, Nvidia claims a Strong Buy consensus view, a rating based on 36 Buys, 4 Holds and 1 Sell. The forecast calls for gains of 4% over the coming year, considering the average target clocks in at $177.57. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.