2025-07-16 00:55Investment Ratings - NVIDIA (NVDA): Outperform with a price target of $185 [6] - AMD: Market Perform with a price target of $95 [6] Core Insights - NVIDIA anticipates the granting of H20 licenses, which could lead to significant revenue recovery in China, potentially adding $15-$20 billion in revenue and 40-50 cents in EPS upside for FY2026 [3][4] - The easing of the China ban is expected to benefit NVIDIA's current year EPS by approximately 10% and AMD's by mid to upper single digits [10] - The datacenter opportunity for NVIDIA remains substantial, with significant upside potential, while AMD faces challenges in its core business despite high AI expectations [8] Summary by Sections NVIDIA - NVIDIA's recent announcements suggest a positive shift regarding H20 licenses, with expectations to resume sales in China [1][2] - The company faced an estimated $8 billion loss in revenue due to the previous ban, but recovery in the second half of the fiscal year is anticipated [3] - Every $10 billion in recovered revenue from China could translate to approximately 25 cents in additional EPS for NVIDIA [9] AMD - AMD has not made similar announcements regarding the easing of restrictions, but it is expected to experience similar dynamics as NVIDIA [5] - The company estimated a $700 million hit to Q2 revenues and an additional $800 million loss in the second half, totaling around $1.5 billion for the year [5] - Each $1 billion in additional revenue from China for AMD corresponds to about 25 cents in EPS, with potential recovery in the second half of the fiscal year [9] Market Context - The report highlights that allowing NVIDIA to compete in China is crucial to maintaining its ecosystem advantages and preventing the market from shifting to local competitors like Huawei [4] - The overall sentiment is that the previous ban on NVIDIA's H20 was unnecessary, as its performance was already below that of local alternatives [11]