On Wednesday Eastern Time, Morgan Stanley analysts lowered Nvidia's revenue forecast, citing concerns that the latest US chip export restrictions on China would have a "more disruptive" impact on Nvidia than expected.
US Chip Restrictions to Harm Nvidia's Revenue
On April 15 US time, Nvidia stated that the company recently received a notice from the US government that the export of H20 chips and chips with H20 memory bandwidth and interconnect bandwidth to China and other regions requires a license.
Morgan Stanley analysts said that as a result, they expect Nvidia's data center revenue to decline by 8% to 9% in the coming quarters.
Nvidia said on Tuesday that due to the US government's decision, inventory, purchase commitments, and related reserve costs associated with H20 products in Q1 are expected to reach approximately $5.5 billion, which "indicates the company is not optimistic about obtaining a license." Meanwhile, Morgan Stanley analysts estimate that in April this year, H20 chips accounted for 12% to 13% of Nvidia's data center revenue.
Nvidia's stock price fell nearly 7% on Wednesday, leading a collective plunge in US chip and tech stocks, as the market worried that tighter export restrictions could have a broad impact on related industries.
Has Nvidia Become a "Card" in Trump's Hand?
Wall Street analysts believe that, in addition to the ongoing escalation of US-China trade conflicts, the rise of China's domestic AI model DeepSeek may also be one of the reasons prompting the US to tighten chip export restrictions on China.
Wedbush analysts said on Wednesday that DeepSeek's rapid rise "has made this high-stakes poker game even more tense" between the US and China, adding that Nvidia's leadership in the AI field makes it "a major chip on Trump's table."
Morgan Stanley stated that despite concerns over the new export restrictions, Nvidia's stock remains their "top pick" in the US stock market. Morgan Stanley Maintains $162 Target Price for Nvidia , noting that the company will still benefit from the growing demand for AI hardware.
Bank of America also reiterated its $160 target price for Nvidia, stating that given the strong global demand for Nvidia's chips, the chipmaker's stock valuation is "compelling." Jefferies and UBS are more optimistic, both reiterating a $185 target.
As of Wednesday's close Eastern Time, Nvidia's stock closed at $104.49. This means Wall Street analysts believe it still has about 53% to 78% upside potential.