A research report from Bank of America Securities suggests that potential U.S. restrictions on Nvidia's (NVDA, Financial) H20 chip exports to China could impact sales. However, the risk is considered manageable. The firm outlines two scenarios where, without considering mitigating factors, H20 chips could account for 6% to 10% of fiscal year 2026 sales. This could affect company sales by 5% to 8% and reduce earnings per share by 6% to 10%.
Nvidia has not disclosed specific H20 sales figures but indicates that recent sales in China are similar to those in fiscal year 2025's fourth quarter, representing approximately 14% of total sales. Despite potential risks, Bank of America maintains that Nvidia stock remains attractive. The current stock price reflects an estimated 2026 EPS of around $4, below the market expectation of $4.5 to $5. The risks associated with China are increasingly reflected in the stock price.
The bank views AI as the fastest-growing long-term opportunity in the semiconductor sector and sees Nvidia’s stock volatility as a buying opportunity. The firm reiterates a "buy" rating with a price target of $160.
