Evercore ISI Keeps Outperform on NVIDIA, $190 Price Target

Evercore ISI analyst Mark Lipacis reiterated an Outperform rating and $190 price target on NVIDIA (NASDAQ: NVDA).

“In an 8-K NVDA cited new H20 license requirements required by the US gov’t effective 9-Apr-25 requiring it to obtain a license to sell H20 or other chips of similar memory bandwidth to companies with HQ or ultimate parent domiciled in China (including Hong Kong and Macau) and embargo/D5 countries.

NVDA estimates $5.5bn of charges associated with H20 products for inventory, purchase commitments, and related reserves in AprQ-25.

Our estimates: • NVDA’s C24 H20 sales in China of ~1m units ($12-15K/unit) or $13.5bn (13% of data center revs, 10% of total revs) • Our channel checks suggested C25 unit expectations at ~300- 400K or ~$4.5-5bn in revs.

We lower our NVDA revs forecast for C25 by $3.5bn, including $0.6bn in AprQ-25. • We model announced $5.5bn charges in AprQ COGS and lower non-GAAP GM from 71% to 58%. • Our revised AprQ-25 EPS is $0.71, 22%/$0.21 below prior estimate and reduce our C25/NTM EPS by 6% to $4.33 from $4.62 Historical Cuts Bounced Back.

We examine 3 case studies of previous disruptions due to NVDA chip issues (C08) and China Restrictions (C22 + C23).

In C22, NTM earnings cut of 28% was followed by a bounce back of NTM to the trendline w/in a year. In C23, China restrictions did not appear to negatively impact earnings.

We have not spoken w/ mgmt. yet, but we believe this development could play out similar to C22 where NTM earnings estimates are initially cut, but then return to trendline within a year.”

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