JP Morgan estimates Nvidia, AMD's 2025 earnings take 8-10% hit from new restrictions
J.P. Morgan estimates that new U.S. licensing requirements for Nvidia and AMD to export certain chips to China will reduce their earnings per share by 8-10% in 2025. Nvidia anticipates a $5.5 billion charge due to halted shipments, impacting its revenue by $15-$16 billion. AMD expects an $800 million charge, with a revenue impact of $1.5-$1.8 billion. Both companies are projected to face significant hits to their datacenter revenues and overall EPS this year.
The new licensing requirements for Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) to export certain chips to China is estimated to negatively affect these companies' earnings per share by 8% to 10% in calendar year 2025, according to an analysis by J.P. Morgan.
Nvidia and AMD received notices from the U.S. government stating they need a special license to ship their H20 and MI308 chips, respectively, to China. Nvidia said it now expects to take a charge of $5.5B due to the halt in shipments. AMD said it expects to suffer an $800M charge.
"Assuming a 65-67% gross margin on the $5.5B inventory charge, we estimate the revenue impact is $15-$16B impact to NVDA on a total of $180B in DC revs this year, or about 8-10% of the datacenter revenue," said J.P. Morgan analysts, led by Harlan Sur, in an investor note. "We estimate the overall EPS impact is about 8-10% for this year."
AMD is expected to take a similar hit, percentage wise.
"Assuming a 45-55% gross margin on the $800M inventory charge, we estimate the revenue impact to AMD is $1.5-$1.8B on a total of $8B in GPU revenues this year and $16B in datacenter revenue, or about 10% of the datacenter revenue," Sur noted. "The EPS impact is estimated to be approximately 10% for this year. In summary, we estimate the total impact on merchant GPU (Nvidia and AMD) AI revenues this year to be around 8-10%."