NVIDIA stock holds as DA Davidson maintains neutral rating

On Wednesday, DA Davidson reiterated a Neutral rating on NVIDIA (NASDAQ:NVDA) stock, maintaining a $120.00 price target. According to InvestingPro data, NVIDIA, with its $2.74 trillion market cap, remains a dominant force in the semiconductor industry, boasting impressive revenue growth of 114.2% over the last twelve months. The firm’s analyst, Gil Luria, highlighted NVIDIA’s recent announcement of a substantial $5.5 billion write-down due to new U.S. government export restrictions. NVIDIA was informed on April 9, 2025, that a license will now be required to export its H20 integrated circuits to China, or to companies with Chinese parentage. This mandate will remain indefinitely, impacting NVIDIA’s financials starting with the first quarter of fiscal year 2026, which concludes on April 27, 2025. Despite these challenges, InvestingPro analysis shows NVIDIA maintains a perfect Piotroski Score of 9, indicating strong financial health, with current assets 4.44 times its short-term obligations.

The company anticipates that its first-quarter results will reflect charges up to approximately $5.5 billion related to inventory, purchase commitments, and associated reserves for H20 products. Sales to China or Chinese companies, which could be significantly affected by these restrictions, are estimated to comprise 10-40% of NVIDIA’s revenues. The exact risk to these sales remains unclear, leaving investors to grapple with uncertainty for the next six weeks until further details emerge.

Despite potential optimism that NVIDIA may have increased shipments to China prior to the restrictions or could develop new products for the Chinese market, the lack of a full pre-announcement has led to a period of significant uncertainty for investors. The market is now awaiting the publication of the new U.S. government regulations, which will clarify the scope of NVIDIA’s limitations in its dealings with China.

The recent rush to announce a $500 billion commitment to build AI infrastructure over the next four years was NVIDIA’s attempt to influence the final regulation set by the Trump administration. However, following the U.S. government’s decision, NVIDIA may reconsider this pledge. If the company does proceed with the investment, DA Davidson suggests it could negatively impact NVIDIA’s long-term profit margins. Currently, NVIDIA maintains a robust gross profit margin of 75%, according to InvestingPro data. Subscribers to InvestingPro can access 15+ additional exclusive ProTips and comprehensive valuation metrics through the platform’s detailed Pro Research Report, offering deeper insights into NVIDIA’s financial health and future prospects.

In other recent news, NVIDIA Corporation has disclosed new export restrictions imposed by the U.S. government, which require the company to secure a license for shipping its H20 integrated circuits to China, including Hong Kong and Macau, and other designated countries. This move is anticipated to result in approximately $5.5 billion in charges related to inventory and purchase commitments for the April 2025 quarter. As a result, Evercore ISI has adjusted its revenue forecast for NVIDIA, reducing it by $3.5 billion for the calendar year 2025. The firm’s earnings per share estimate for the April 2025 quarter has also been revised downward by 22% to $0.71. Despite these challenges, NVIDIA has launched its new GeForce RTX 5060 GPUs, featuring advanced AI capabilities and priced starting at $299. These GPUs are designed to enhance gaming and creative workflows, with availability in both desktop and laptop formats. Additionally, President Trump has praised NVIDIA’s investment in the U.S. as one of the biggest announcements ever, highlighting the company’s role in the tech industry. Meanwhile, Evercore ISI maintains an Outperform rating on NVIDIA, suggesting potential resilience in the face of these regulatory challenges.

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