Analysts at Morgan Stanley have revised NVIDIA's (NVDA, Financial) revenue forecasts downward due to concerns over the impact of new U.S. chip export restrictions to China. They believe the restrictions will be more disruptive than anticipated. NVIDIA revealed that exports of its H20 chips and similar products to certain countries now require a license, which could lead to an 8% to 9% decline in data center revenue in upcoming quarters.
As a result of these restrictions, NVIDIA expects first-quarter costs related to H20 products to reach approximately $5.5 billion, reflecting pessimism about obtaining necessary licenses. In April, H20 chips accounted for 12% to 13% of NVIDIA's data center revenue. Consequently, NVIDIA's stock plummeted nearly 7%, affecting other chip and tech stocks as well.
Wall Street analysts suggest that the rise of China's AI model DeepSeek might be a factor in the tightened export restrictions. Despite concerns, Morgan Stanley maintains NVIDIA as a top pick with a target price of $162, while Bank of America and others have reiterated higher target prices, citing strong global demand for NVIDIA's AI hardware.
