Wall Street’s leading research firm Bernstein shared its views on the resumption of Nvidia’s (NVDA) H20 chip sales to China. The firm believes that resuming sales of these artificial intelligence (AI) chips is a positive step toward recovering lost sales since the ban. Nonetheless, the firm forecasts that Nvidia’s share of the Chinese AI chip market will fall to 54% in 2025 from 66% recorded in 2024.
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Bernstein’s view reflects regulatory challenges as well as the rapid advances of domestic Chinese competitors like Huawei, Cambricon, and Hygon. These companies have leveraged Nvidia’s chip absence in the country to fill the void created by U.S. export curbs.
Bernstein analyst Stacy Rasgon has a Buy rating on NVDA stock, with a price target of $185, implying 6.5% upside potential from current levels. Rasgon ranks #210 out of the 9,897 analysts tracked. He boasts a 64% success rate and an average return per rating of 23.50%.
Bernstein Predicts a Fall in Nvidia’s China Market Share
While Nvidia’s market share will decrease, Bernstein believes that the share of locally produced AI chips in China will increase dramatically, from 17% in 2023 to 55% by 2027. Bernstein views the U.S. export restrictions as a structural risk to Nvidia’s long-term dominance in China, potentially accelerating the development of China’s AI chip ecosystem.
In April, the Trump administration placed a ban on the export of H20 AI chips to China, citing national security concerns. However, the White House recently revoked the ban as part of easing trade negotiations with the country. Although Nvidia can resume sales, this is conditioned on obtaining licenses, securing orders, production capacity, and shipment logistics. Moreover, the firm expresses skepticism about the need and competitiveness of the H20 chips since Chinese rivals are improving in quality.
To conclude, Bernstein believes that although Nvidia’s sales are expected to increase in the short-term due to the export resumption, in the long-term, the company will face market share erosion as China’s domestic AI chip industry continues to strengthen.
Is NVDA Stock a Good Buy?
On TipRanks, NVDA stock has a Strong Buy consensus rating based on 34 Buys, three Holds, and one Sell rating. The average Nvidia price target of $185.79 implies nearly 7% upside potential from current levels. Year-to-date, NVDA stock has gained 29.4%.
