Summary of Conference Call on NVIDIA and AMD Industry Overview - The conference call primarily discusses the U.S. semiconductor industry, focusing on NVIDIA (NVDA) and Advanced Micro Devices (AMD) and their recent developments regarding sales in China. Key Points on NVIDIA (NVDA) 1. **Licensing Developments**: NVIDIA anticipates that H20 licenses will soon be granted, with the U.S. government assuring the company that licenses will be issued, allowing for potential deliveries soon [1][3]. 2. **Revenue Impact**: NVIDIA estimated a loss of approximately $8 billion in revenue for the current quarter due to the China ban. However, there is an expectation of substantial revenue recovery in the second half of the fiscal year, which could lead to an EPS increase of 40-50 cents for FY2026 if $15-$20 billion in China revenue is captured [3][4]. 3. **Competitive Position**: The ability to compete in China, even with constrained parts, is seen as beneficial for NVIDIA, as it helps maintain its ecosystem advantages and limits structural risks [4]. 4. **EPS Sensitivity**: Every $10 billion in recovered revenue from China is estimated to contribute approximately 25 cents to NVIDIA's EPS [3][9]. 5. **Price Target and Rating**: NVIDIA is rated as Outperform with a price target of $185, reflecting optimism about its datacenter opportunities [6][8]. Key Points on Advanced Micro Devices (AMD) 1. **Revenue Losses**: AMD reported a $700 million hit to Q2 revenues due to the China ban, with an additional expected loss of $800 million in the second half of the year, totaling around $1.5 billion for the year [5]. 2. **Potential Recovery**: While it is too late to book China sales for the current quarter, AMD may recover some revenue in the second half, potentially around $1 billion [5]. 3. **EPS Impact**: Similar to NVIDIA, every $1 billion in additional China revenue for AMD corresponds to approximately 25 cents in EPS. Capturing this amount could lead to mid to upper single-digit accretion to current consensus EPS for CY25 [5][10]. 4. **Price Target and Rating**: AMD is rated as Market Perform with a price target of $95, indicating concerns about high expectations in AI and weaknesses in core business segments [6][8]. Additional Insights - **Market Dynamics**: The easing of restrictions on NVIDIA is viewed positively, as the previous ban was considered unnecessary and could have handed the AI market in China to competitors like Huawei [4][11]. - **EPS Projections**: The expected EPS accretion for NVIDIA from incremental China revenue is projected at 10% for the current year, while AMD might see a 7% increase [10]. - **Strategic Relationships**: NVIDIA's CEO has been actively engaging with U.S. administration members to mitigate the risks associated with the ban, which reflects a strategic approach to maintaining market access [2]. This summary encapsulates the critical developments and financial implications for NVIDIA and AMD in the context of the U.S. semiconductor industry, particularly regarding their operations in China.

Investment 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]