Nvidia Corp. (NASDAQ: NVDA) stock was crushed in August as the fate of semiconductors globally is still being decided. Recent moves involving China also have played into this rocky road for the chip company.
Famously, U.S. Speaker of the House Nancy Pelosi visited the island nation of Taiwan, to the chagrin of China. Along with her came a delegation to ascertain the future of semiconductor production and to maintain stability within the region.
Some could argue that this political move has backfired, as semiconductor stocks have pulled back since then. The expansion of foundries within the United States is a net positive, given enough time they could alleviate global demand and add to national security.
Bernstein’s analyst, Stacy Rasgon, recently reiterated an Outperform rating on Nvidia but lowered the $210 price target to $180, implying upside of 19% from the most recent closing price of $150.94.
All this comes after the company released an 8-K filing indicating the United States has imposed new license requirements, effective immediately, affecting the company’s ability to ship its A100 and upcoming H100 products, as well as any future products with similar or greater performance, to China as such products may be diverted to military end use.
Rasgon notes that $400 million per quarter of potential impact suggests relevant China sales are a low double-digit percentage of total data center revenues. Note that Nvidia previously issued guidance for third-quarter data center revenue to be $3.8 billion to $3.9 billion, which is “not trivial but not an insurmountable blow either,” though it is clearly an “incremental negative” as the business may be permanently impaired, according to Rasgon. Discussing possible impacts to other companies, he noted that AI-focused data center GPUs are more likely to be “in the cross-hairs” than general purpose items.
Nvidia stock was last seen down roughly 5% Thursday morning near $143 a share. The 52-week range is $140.55 to $346.47, and the consensus price target is $216.05.
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