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On Wednesday, Raymond (NSE:RYMD) James maintained a Strong Buy rating on NVIDIA (NASDAQ:NVDA) shares but lowered the price target from $170.00 to $150.00. The adjustment comes after NVIDIA announced the U.S. government’s new licensing requirement for exporting H20 graphics processing units (GPUs) to China, including Hong Kong and Macau. This change is expected to lead to $5.5 billion in charges for the first quarter of fiscal year 2026 due to inventory and purchase commitments. According to InvestingPro data, NVIDIA maintains strong financial health with a current ratio of 4.44x and operates with a moderate debt level, suggesting it’s well-positioned to navigate these challenges.
NVIDIA had reported that China represented 14% of its sales in the fourth quarter of fiscal year 2025, with H20 GPUs likely making up approximately 80-85% of that figure, or around $4.5 billion. The decision by NVIDIA’s management to account for inventory charges indicates an expectation that the company might not secure the necessary license to continue exports. Despite these challenges, InvestingPro analysis shows NVIDIA achieved remarkable revenue growth of 114.2% in the last twelve months, with total revenue reaching $130.5 billion.
Despite the restrictions on H20 GPUs, which were not entirely unexpected, Raymond James believes that NVIDIA’s stock price already reflects this risk. The firm noted that NVIDIA’s stock is trading at 27 times price-to-earnings (P/E), below the 5-year average P/E of around 40 times prior to the surge in AI spending driven by technologies like ChatGPT. InvestingPro data reveals the company’s current P/E ratio stands at 37.89x, with a notably low PEG ratio of 0.26, suggesting potential value relative to its growth prospects. For deeper insights into NVIDIA’s valuation metrics and 17 additional ProTips, subscribers can access the comprehensive Pro Research Report.
Raymond James also highlighted that recent discussions in Asia revealed no signs of a slowdown in AI spending among hyperscale customers. Additionally, the ramp-up in volume of the Blackwell (GB200) and the on-track shipment of GB300 for the third quarter are expected to help sustain NVIDIA’s momentum throughout the year. With an impressive gross profit margin of 75% and return on assets of 82.2%, NVIDIA demonstrates strong operational efficiency and market leadership in the semiconductor industry.
In other recent news, NVIDIA is facing significant financial challenges due to new U.S. government export restrictions requiring a license for its H20 integrated circuits to be sold to China and related regions. This development has led NVIDIA to anticipate up to $5.5 billion in charges related to inventory and purchase commitments for the first quarter of fiscal year 2026. Analysts from DA Davidson and Evercore ISI have maintained their ratings on NVIDIA, with the former keeping a Neutral rating and the latter an Outperform rating, despite the anticipated financial impact. Evercore ISI has adjusted its revenue forecast for NVIDIA, reducing it by $3.5 billion for calendar year 2025, and has also lowered its earnings per share estimate for the April 2025 quarter by 22%.
In addition to these regulatory challenges, NVIDIA has launched its new GeForce RTX 5060 GPUs, which feature advanced AI capabilities and are designed for both gaming and creative work. The GPUs, built on NVIDIA’s Blackwell architecture, include DLSS 4 technology and are available at a starting price of $299. Meanwhile, NVIDIA is also part of the group of companies known as the Magnificent Seven, which have seen a slight rise in premarket trading amid speculation of a potential pause in auto tariffs. However, the Trump administration continues to pursue tariffs on semiconductors, which could impact NVIDIA and other tech companies.
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