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Investing.com - William Blair has reiterated an Outperform rating on Nvidia (NASDAQ:NVDA), highlighting potential earnings upside from renewed China market access. The semiconductor giant, currently trading near its 52-week high with a market cap of $4.2 trillion, shows strong momentum despite InvestingPro analysis indicating the stock is trading above its Fair Value.
The investment firm sees an opportunity for an additional $0.30 in earnings per share for Nvidia’s fiscal 2026, assuming approximately $20 billion in China revenue for the full year, up modestly from the $17.1 billion expected in fiscal 2025. This projection aligns with the company’s impressive revenue growth of 86.17% over the last twelve months, according to InvestingPro data, which offers 20+ additional insights about NVDA’s growth prospects.
With Nvidia having recorded $5.5 billion in China revenue during the first quarter, William Blair projects $14.5 billion in additional China revenues concentrated in the second half of fiscal 2026.
The firm also notes potential gross margin tailwinds in the second half as sales of previously written-off H20 chips could be recorded with minimal cost of goods sold, potentially helping Nvidia achieve its mid-70% non-GAAP gross margin target.
While the return of China revenue represents a positive development for Nvidia, William Blair cautions it does reintroduce downside risk if new export controls were to again restrict this opportunity, though the firm believes the U.S. government’s more compromising approach to export controls could benefit other chip vendors as well.
In other recent news, Nvidia is actively working to resume sales of its H20 GPUs to China, having filed new applications with the U.S. government. The company has received assurances that licenses will be granted, potentially unlocking around $10 billion in revenue from previously written-down inventory. Additionally, Nvidia has announced plans for a new RTX PRO GPU tailored for the Chinese market, which could address a sales impact estimated by Citi to be between $4-5 billion. Citi has reiterated its Buy rating for Nvidia, highlighting the significant market opportunity in China, while Oppenheimer has raised its price target for the company to $200, citing structural tailwinds from AI and data center growth. Meanwhile, Chinese tech giants ByteDance and Tencent (HK:0700) are seeking to purchase Nvidia’s H20 chips, pending U.S. government approval. On another front, Gorilla Technology has reported a $5.6 billion global pipeline and has become an official Nvidia solutions provider, leveraging Nvidia’s AI frameworks. Gorilla aims to close $1.3 billion in contracts by mid-2026 and has ongoing negotiations for high-value opportunities.
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