Wells Fargo Continues to Project $185 PT on Nvidia
Wells Fargo analyst Aaron Rakers reiterated on April 15, 2025, a ‘Overweight’ rating on Nvidia. The price target of $185 was reaffirmed.
“NVIDIA Banned from Selling H20 into China-Up to $5.5B Impact or 13ppt on Our F1Q26 GM% Estimate
Our Call
Today (4/15) after market close, NVIDIA announced that due to the U.S.
Gov’s export license requirement to China, its F1Q26 results (April ’25) will include up to ~$5.58 of charges associated with H20 products.
These charges relate to H20 inventory, purchase commitments, and related reserves.
NVIDIA states that the USG informed the company on 4/14 that the export license requirement would be in effect indefinitely.
This follows reports on 4/9 that the Trump administration was reversing course on its crackdown of NVIDIA H20 exports to China.
GM% Impact
We would note that similar write-downs/charges have historically been included in NVIDIA’s non-GAAP reported results.
We estimate the up to $5.5B of charges to impact F1026 GM% by as much as ~13ppt, or implying 58.6% GM% vs. our current 71.2% estimate (Street: 71.1%).
While we do not have details on the exact write-down/ impairment charges, we will be left to consider the potential sell-through implications of the existing H20 inventory in other regions (ie., positive future GM %?).
China Hyperscaler Pull-forward – $16B in 1Q25?
We would highlight industry reports that note China hyperscalers had placed up to $16B of H20 orders in 1Q25.
As a reminder, NVDA China revenue (i.e., H20-driven) grew 184% y/y and +2% sequentially in F4Q25; NVDA continued to note China was a lower % of total Data Center revenue (we est.
10%-15% of DC revenue; ~20%-25% pre-export controls).
NVDA previously expected for China shipments to remain around current % absent any regulation changes.
Following the ban, Chinese hyperscalers will likely have to rely more on Huawei’s Al processors w/ the Ascend 910C (~60%+ of H100 inference performance) built on TSMC/ SMIC 7nm technology set to ramp in 2H25.
We’d note reports from earlier this year that Huawei has enough die to make 1M units.
The move comes as Chinese hyperscalers are rolling out DeepSeek Al models.
We think investors will question whether this ban will remain in place as Al competition intensifies or is another bargaining chip.
We think it’s important to highlight that the Biden Administration’s Al Diffusion rule with mandatory compliance is set to take effect on 5/15.
We’d highlight our previous note on the proposed regulation here, though we do not expect it to take effect in its current form.”
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