TLDR:
- Nvidia has lost over $250 billion in market cap since Tuesday following Trump administration export controls
- The company announced a $5.5 billion charge due to U.S. government blocking H20 AI chip exports to China
- Multiple analysts have lowered price targets, with Wolfe Research cutting from $180 to $150
- Morgan Stanley predicts data center revenue could drop 8-9% over upcoming quarters due to China restrictions
- Despite short-term concerns, most analysts maintain Buy ratings with strong long-term outlook
Nvidia’s stock has taken a significant hit this week, plummeting after the chipmaker disclosed a $5.5 billion charge resulting from export controls imposed by the Trump administration. The restrictions specifically target Nvidia’s H20 AI chips designed for the Chinese market, leading to a massive market cap loss exceeding $250 billion since Tuesday.
The company’s stock fell as much as 4% on Thursday following a 7% drop the previous day. Despite these losses, Nvidia remains the third-largest U.S. company by market capitalization.
The U.S. government’s move to block exports of Nvidia’s H20 AI chips to China cited national security concerns. These chips were specifically developed to comply with previous Biden-era restrictions and had become a crucial product for Nvidia in the Chinese market.
Jefferies analysts noted in a Wednesday report that while the H20 ban was anticipated, the size of the financial impact wasn’t. This unexpected scale of the charge has rattled investors.
Stifel analysts maintain confidence in Nvidia’s long-term growth prospects despite the current restrictions. They believe that while short-term volatility is likely, the company’s overall growth trajectory remains strong.
Analyst Reactions Vary
Wall Street firms have started adjusting their outlook on Nvidia. Wolfe Research has lowered its price target from $180 to $150, though it maintained an Outperform rating. The firm expressed concerns that U.S. export restrictions could impact near-term revenue more severely than previously expected.
Morgan Stanley, while still listing Nvidia as a “top pick,” has trimmed its expectations. The investment bank now forecasts that Nvidia’s data center revenue could decline by 8-9% over upcoming quarters as China-related sales decrease.
Not all analysts share the same level of caution. Bank of America reaffirmed its Buy rating with a $200 price target, describing Nvidia as “the core infrastructure play” in the AI revolution. BofA analysts believe Nvidia’s advantages extend beyond GPUs to include its CUDA software ecosystem, enterprise partnerships, and AI developer tools.
Geopolitical Tensions Escalate
The situation highlights increasing global trade tensions affecting the tech industry. Dutch semiconductor company ASML recently reported first-quarter sales slightly below forecasts and warned about “greater uncertainty” due to trade tensions.
The size of Nvidia’s charge suggests the company may lack confidence that necessary export licenses will be granted by the current administration. It also raises concerns about potential further regulations.
Adding to the complications, the New York Times reported that Nvidia CEO Jensen Huang traveled to Beijing to meet with Chinese trade officials. According to state media, Huang emphasized his company’s commitment to the Chinese market, stating they would “spare no effort” to build compliant products.
However, this outreach might create domestic political challenges. The House Select Committee on the Chinese Communist Party has launched an investigation into Nvidia’s business practices in Asia. The investigation focuses on whether the company violated export rules, particularly regarding its relationship with Chinese AI startup DeepSeek.
Broader Market Implications
Wedbush Securities described the chip ban as the “first shots fired” in a potential trade war. They noted that Nvidia and other U.S. tech companies are “caught in the eye of this Category 5 storm.”
Despite the current turbulence, Nvidia’s overall financial health remains strong. According to InvestingPro data, the company maintains a perfect Piotroski Score of 9, indicating exceptional financial strength.
On TipRanks, NVDA stock still holds a Strong Buy consensus based on 37 Buys and five Holds, with no Sell ratings. The average price target sits at $169.30, suggesting a 67% upside from current levels.
The recent analyst adjustments reflect growing concern about near-term revenue impacts, particularly around geopolitical tensions and export policy volatility. Even the most optimistic firms are now accounting for increased risk in their projections.
Nvidia’s H20 chips were designed to navigate previous restrictions, but with the U.S. now requiring licenses even for these modified chips, the company faces substantial revenue challenges in one of its key markets.
For investors watching Nvidia, the current situation represents a classic case of short-term pain versus long-term potential. While immediate headwinds are clear, the company’s central position in the AI infrastructure ecosystem remains largely unchallenged.
The market will be closely monitoring upcoming earnings reports to assess how effectively Nvidia can navigate these trade restrictions and whether alternative strategies might emerge to address the Chinese market challenges.
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