DA Davidson Keeps $120 PT and ‘Neutral’ Rating on Nvidia
D.A. Davidson analysts have reiterated on April 15, 2025, Nvidia’s $120 price target and ‘Neutral’ rating.
“China Write-Down
This evening, NVIDIA published an 8K saying they will be taking a $5.5bn write down due to new export restrictions to China.
We are maintaining our NEUTRAL rating and $120 target.
NVIDIA will be taking a $5.5bn write down:
“On April 9, 2025, the U.S. government… informed NVIDIA that the USG requires a license for export to China… or to companies headquartered or with an ultimate parent therein, of the Company’s H20 integrated circuits…
On April 14, 2025, the USG informed the Company that the license requirement will be in effect for the indefinite future.
The Company’s first quarter of fiscal year 2026 ends on April 27, 2025.
First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.”
Estimates of sales to China or Chinese companies ranges from 10-40% of NVIDIA revenues (we believe the higher end), and the wording of the announcement does not make it clear how much of those sales is at risk going forward.
The most bullish interpretation would be that NVDA had a spike in shipments before the restrictions came into effect, the write-down was just excess inventory, and that they will create new products to sell into China.
Even in this unlikely case, without a full pre-announcement, there are 6 weeks for investors to live in significant uncertainty.
We will now wait for the US government to publish the new regulations which may help shed light on the extent of limitation on NVDA going forward.
The timeline in the 8k explains the rushed announcement yesterday that NVDA will build $500bn of Al infrastructure over the next 4 years.
The appeal to the Trump administration was aimed at mitigating the final regulation.
NVIDIA may now choose not to follow through on this pledge given the outcome, and if it does, we believe it will erode long-term margins.”
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