Nvidia H20 restriction in China ‘unwelcome,’ but ‘manageable,’ says BofA

BofA notes that Nvidia (NVDA) announced that the U.S. Government would now require a license to ship the H20/equivalent AI chips to China and arms-embargoed countries and that the company plans to take a $5.5B charge in fiscal Q1 for inventory, purchase commitments and related reserves. The firm interprets the charge as indicative of high probability of H20 restriction and low probability of future licenses, as well as a 20% hit to Q1 GAAP EPS, though perhaps less impactful to non-GAAP sales and EPS, the analyst tells investors. The restriction is “unwelcome but somewhat expected,” and the risk is “manageable,” says BofA, which reiterates a Buy rating and $160 price target on Nvidia shares, which had been lowered from $200 earlier this morning as part of a broader note on the semis sector.