Analyst Sticks With Nvidia Despite Fallout From China Curbs

Following the H20 effective shipment ban to China on April 15, Nvidia Corp NVDA stock has declined 14%, versus the PHLX Semiconductor Sector’s 8% and the S&P 500’s 4%.

BofA Securities analyst Vivek Arya noted four key concerns pressuring the stock. They included China sales, AI Diffusion Rules, gross margin return to mid-70% by the fiscal second half amid multiple sales cuts and cost pressures, and cloud capex visibility into calendar 2026.

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Of these four, Arya noted China and H20 exposure as generally de-risked and noted his revised fiscal 2026 and 2027 (roughly calendar 2025 and 2026) base case EPS of $3.97 and $5.74 fully baked into the cut. Gross margins could face modest cost inflation pressures, but are expected to generally improve throughout the fiscal second half as Blackwell gains scale and Blackwell Ultra ramps up. Cloud capex needs more quarters for CSPs to provide more visibility in the calendar for 2026.

According to Arya, the upcoming AI Diffusion Rule remains the biggest near-term risk, with his worst-case scenario assuming another ~10% drop in sales and up to 11% of EPS shaved off from his new base case. However, even with this distressed scenario, the stock is trading at just 19 times calendar 2026 P/E today, well below the historical ~30 times median and typical ~23 times cycle trough.

Arya reiterated Buy on Nvidia, noting the current stock volatility as an enhanced buying opportunity. However, he lowered the price target to $150 from $160, unchanged at 26 times calendar 2026 P/E, to reflect lower EPS.

Arya’s new base case assumptions for Nvidia and Advanced Micro Devices, Inc AMD now exclude sales of H20 and MI308 products, which now require licenses to ship to China.

Arya assumed a ~4% sales and ~5% EPS impact for Nvidia and ~ a 3% sales and ~4% EPS impact for AMD in calendar 2026.

Arya updated both models to reflect this impact and the one-time inventory/reserve charge ($5.5 billion Nvidia, $800 million AMD).

For AMD, Arya’s new $105 price target (down from $110) represents an unchanged ~20 times P/E or 0.9 times PEG off his new $5.29 calendar 2026 EPS, generally in line with the 1-2 times historical range for high-growth compute semis; as such, he reiterated his Neutral rating.

Arya flagged Nvidia’s global customer footprint and that up to 24% of fiscal 2025 (calendar 2024) sales (“billing” location) were from non-China Tier 2 or 3 countries, including 18% of sales billed in Singapore. While the exact mix of shipment locations is difficult to identify, Arya provided a worst-case scenario analysis where up to 5-10% of these sales could be restricted under the upcoming AI Diffusion Rule.

In the 10% sales cut scenario, Nvidia EPS may decline by an additional 14% and 11% to $3.69 and $4.98 in fiscal 2026 and 2027 (calendar 2025 and 2026) from the current consensus $4.29 and $5.59 and his base case $3.97 and $5.74.

Notably, Nvidia trades at 16.6 times off Arya’s new base case calendar 2026 EPS (including the H20 ban) today. Even if he assumed the above worst-case 10% AI Diffusion restriction scenario, valuation remains attractive at 19 times calendar 2026 P/E or 0.7 times PEG, below the historic 1-2 times range for high-growth compute semis and below the 1.8 times median for other Mag-7 peers.

Price Actions: NVDA stock is up 1.8% at $98.69 at last check Tuesday. AMD is up 1.50%.

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