Nvidia Could Add Billions From China Sales If H20 GPUs Get Green Light From US: Analyst

Core Viewpoint - BofA Securities analyst Vivek Arya maintains a Buy rating on NVIDIA Corp with a price target of $220, citing strong sales momentum and long-term earnings potential, while noting potential near-term volatility after a strong year-to-date performance [1] Financial Performance - Second-quarter revenue is expected to reach $47 billion, surpassing the $45.8 billion consensus and NVIDIA's own guidance of $45 billion, driven by the ramp-up of Blackwell GPUs and robust cloud infrastructure spending [2] - For the third quarter, revenue is forecasted to grow to $54 billion, ahead of the $52.5 billion consensus, with potential upside to $57–$60 billion if H20 shipments resume [3] - Gross margins are projected to rise to 73%–74% by the third quarter, with a potential boost of 200–300 basis points from utilizing previously written-down H20 inventory valued at approximately $5.5 billion [4] Long-term Outlook - Fiscal 2026 sales forecast has been raised to $210–$215 billion, with projected pro forma EPS of $4.70–$4.80, significantly above the $4.38 consensus [4] - Arya anticipates fiscal 2027 earnings power approaching $7 per share, assuming the AI total addressable market grows from $309 billion to $341 billion, maintaining a 60% year-over-year growth rate [8] - NVIDIA could target long-term EPS of $10 per share, with China accounting for about 10% of the global AI accelerator TAM [9] Market Dynamics - Continued strength in Blackwell and Blackwell Ultra, along with rising AI-related capital expenditures from major hyperscalers like Google, Meta, and Oracle, supports the expected revenue growth [5] - Robust capex projections from major U.S. hyperscalers indicate a shift towards faster-depreciating assets, with Meta increasing its spending forecast to $100 billion for calendar 2026 [7] Regulatory and Competitive Landscape - H20 shipments may face regulatory risks due to potential Chinese security probes, and domestic alternatives in China could impact NVIDIA's competitiveness [6] - Maintaining U.S. licensing for shipping advanced chips is critical for NVIDIA to preserve its market lead over competitors like Advanced Micro Devices [6] Investor Sentiment - NVIDIA stock is currently trading higher by 2.49% to $178.05, reflecting positive investor sentiment following the analyst's report [10]