BofA Cuts Price Target on Nvidia to $160
BofA analyst Vivek Arya lowered on April 15, 2025 its price target on Nvidia from $200 to $160. The ‘Buy’ rating was maintained.
“China H20 restriction unwelcome but somewhat expected, manageable risk
NVDA to take $5.5bn charge on China restrictions Post close NVDA announced that the US Government (USG) would now require a license to ship the H20/equivalent Al chips to China and D-5 (arms-embargoed) countries.
NVDA plans to take a $5.5bn FQ1 charge for Inventory, purchase commitments and related reserves.
We Interpret the $5.5bn charge as
1) Indicative of high probability of H20 restriction/low probability of future licenses,
2) a 20% hit to Q1 GAAP eps, though perhaps less impactful to non-GAAP sales/EPS, and
3) representative of a multi quarter Inventory/purchase commitment as is the norm.
Reiterate NVDA Buy.
We est. a manageable 5-8% sales, 6-10% pf-EPS impact Ignoring any positive offsets (stronger Blackwell sales), we estimate a 5%-8% sales and 6% to 10% EPS Impact under two scenarios of H20 at 6% or 10% of FY26/CY25E sales (see Pg. 2 for details).
NVDA does not disclose H20 sales, but suggested total China sales near-term could be similar to FQ4’25 levels or around 14% of total.
We estimate H20 data center compute is likely around 6-10 points of that total exposure with rest in non-restricted auto, gaming, networking, workstation shipments.
We then assume FQ1’26 (AprilQ) H20 shipments are already done, so any restrictions likely hit from FQ2 onwards.
As reference our current model has FY26 H20 sales at around $12bn or 6% of total year sales (above consensus per Visible Alpha that has H20 sales at $8bn.)
However, we also flag positive offsets, based on recent positive comments re Al chips demand from OpenAI, Google and Amazon coupled with stronger ASP of next-gen NVDA GB300 Blackwell Ultra.
Positive offsets could also help against NVDA’s rising cost burden from rising US manufacturing (likely 100-200bps 2H GM headwind).
China risks were already starting to reflect in the stock We continue to find NVDA stock compelling, trading <1x its earnings growth, since global demand for leading-edge Al and NVDA’s unmatched platform leadership can continue to offset regional headwinds.
NVDA stock has historically troughed 23-25x forward PE but in the recent downturn the stock slipped closer to 20x PE, Implying many Investors were already anticipating EPS cuts.
Expressed differently we believe the stock Is currently baking in FY26/CY25E EPS closer to $4/share, Inline with our analysis above, rather than current $4.50-$5 consensus.
One could also argue the Immediate stock decline would be unwelcome but perhaps reduce the overhang that has existed on the stock since late last year when the Biden administration Increased Al chip controls.
To be fair we are still not out of the woods as Al diffusion rules (controlling level of GPU shipments) could impact even more countries.
However, with every clarification, It gets easler to size and bake the Impact in estimates in our view.
Stock volatility enhanced buying opportunity for NVDA Rising Al restrictions are likely to Impact other key Al-levered computing, networking and optical stocks (AVGO, AMD, MU, ARM, MRVL, COHR, LITE) and raise concerns around enhanced restrictions in other areas (semicap equipment, EDA, foundry etc.)
However, we believe Al remains the fastest growing secular growth opportunity in semis, and view stock volatility as an enhanced buying opportunity for NVDA. (see our recent Tariff tales report).”
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