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On Wednesday, Stifel analysts reiterated their Buy rating on NVIDIA stock (NASDAQ:NVDA) with a steady price target of $180.00, despite the company facing a significant charge due to new U.S. export controls. The semiconductor giant, which boasts a perfect Piotroski Score of 9 according to InvestingPro data, maintains excellent financial health with an overall score of "GREAT," suggesting strong fundamental stability despite regulatory challenges. NVIDIA announced it would incur a $5.5 billion charge to its inventory as a result of the requirement for an indefinite license to export H20 processors to China, which includes Hong Kong, Macau, and D:5 countries, as well as companies with headquarters or parent companies in those locations.
The decision to record this charge suggests NVIDIA may have reservations about the likelihood of obtaining the necessary export licenses or that it anticipates additional regulations. AMD (NASDAQ:AMD) also reported a related inventory charge of $800 million for its MI308 products. These charges are expected to affect the full-year revenue estimates for both companies by single-digit percentages.
The recent developments add to the uncertainty in a market already prone to volatility. However, Stifel analysts believe that the longer-term outlook for NVIDIA remains positive. The $5.5 billion charge, to be recorded in the first quarter of fiscal year 2026 ending April 27th, represents a substantial hit to the company’s inventory costs, which stood at approximately $10 billion at the end of last year, with around $30 billion in year-end commitments.
While the exact impact on NVIDIA’s financials, such as free cash flow (FCF) and cost of goods sold (COGS), is yet to be clarified, the charge could imply an $8.5 billion to $9 billion reduction in annual revenue, equating to a 4.25-4.5% decrease from Stifel’s top-line estimate for FY26E. This potential impact comes after NVIDIA’s impressive 114.2% revenue growth in the last twelve months, with the company maintaining strong liquidity evidenced by a current ratio of 4.44. InvestingPro subscribers can access 15+ additional key metrics and insights about NVIDIA’s financial performance. The analysts note that this development raises questions about potential bans on H20 processors, implications for other components, and the possibility of increased costs throughout the year.
Further details on these matters are expected to emerge from both the U.S. administration and NVIDIA’s management. The market is looking ahead to NVIDIA’s upcoming earnings announcement on May 28th for more definitive information on how the company plans to navigate these regulatory challenges. Trading at a P/E ratio of 34.98, NVIDIA’s valuation reflects high growth expectations. Investors seeking comprehensive analysis can access NVIDIA’s detailed Pro Research Report, along with real-time metrics and expert insights, through InvestingPro.
In other recent news, NVIDIA disclosed that it anticipates incurring approximately $5.5 billion in charges related to its H20 products due to new export restrictions to China and other countries under U.S. arms embargoes. This announcement has prompted several analyst firms to adjust their price targets and ratings. TD Cowen reiterated a Buy rating with a $140 target, emphasizing NVIDIA’s strong position in AI despite the challenges. UBS also maintained a Buy rating with a $185 target, noting that the licensing requirement acts as a ban but might serve as a positive clearing event for the stock.
Piper Sandler adjusted NVIDIA’s price target to $150 from $175, maintaining an Overweight rating while highlighting NVIDIA’s market dominance in AI and accelerated computing. Cantor Fitzgerald kept an Overweight rating with a $200 target, citing NVIDIA’s proactive approach to regulatory challenges. Mizuho (NYSE:MFG) reiterated an Outperform rating with a $168 target, focusing on NVIDIA’s growth potential in AI and its strategic positioning despite the export restrictions. These developments reflect the complex landscape NVIDIA navigates as it continues to lead in AI and computing technologies.
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