TLDR

• Nvidia stock fell nearly 10% over two days after Trump administration banned H20 chip exports to China
• Company expects $5.5 billion revenue hit in Q1, wiping out $266 billion in market cap
• Analysts project full-year revenue losses between $10-16 billion
• UBS cut price target from $185 to $180, lowering gross margin forecast to 58-59%
• Despite setbacks, NVDA maintains “Strong Buy” consensus with average price target of $170.78

Nvidia’s stock took a sharp downturn this week following the Trump administration’s decision to ban exports of its AI chips to China.

The chipmaker’s shares fell nearly 3% on Thursday, extending Wednesday’s 7% decline, as investors reacted to news that could significantly impact the company’s bottom line.

The tech giant disclosed in a regulatory filing late Tuesday that it would take a $5.5 billion hit in the first quarter due to the ban on sales of its H20 chips. These chips were specifically designed for the Chinese market to comply with earlier U.S. trade restrictions.

Thursday’s drop pushed Nvidia’s market capitalization down to $2.47 trillion. This represents a staggering $266 billion loss in market value since the tighter trade rules were announced.

Analyst Reactions

Wall Street quickly adjusted its outlook for the company. JPMorgan analyst Harlan Sur estimated the export controls would reduce Nvidia’s full-year data center revenue and earnings per share by 8% to 10%. This translates to approximately $15-16 billion in lost revenue.

Jefferies analyst Blayne Curtis offered a somewhat less severe projection, predicting a $10 billion revenue hit. The varying estimates highlight the uncertainty surrounding the long-term impact of these restrictions.

UBS also trimmed its price target for Nvidia from $185 to $180. The firm expects Nvidia could lose around $700 million in revenue in the April quarter, with an additional $8 billion over the following two quarters.

The financial firm also lowered its gross margin forecast to 58-59% in the current quarter, down from the previous estimate of 71%. This reduction accounts for higher tariff-related costs.

Political Surprise

The chip trade curbs caught Wall Street off guard. A recent NPR report had suggested that Trump had backed away from plans to restrict Nvidia’s H20 chips after a dinner with CEO Jensen Huang at Mar-a-Lago.

Nvidia has declined to comment on this matter. However, just two days after Tuesday’s disclosure, Huang traveled to Beijing at the invitation of a domestic trade group, according to Bloomberg.

The timing of this visit raises questions about potential diplomatic efforts to navigate the challenging trade environment.

Earlier this week, Nvidia announced plans to produce up to $500 billion of AI infrastructure in the United States within the next four years. This move appears strategic as the tech industry seeks to strengthen domestic manufacturing amid Trump’s aggressive trade policies.

The Commerce Department opened a probe Tuesday into computer chips under Section 232 of the Trade Expansion Act of 1962. This law gives the president authority to impose tariffs on imports deemed essential to national security.

Trump has made his intentions clear, posting: “We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations.”

The impact spread beyond Nvidia. Other chip stocks also declined, though more modestly. Advanced Micro Devices (AMD), similarly affected by the new restrictions, fell about 1%. Broadcom (AVGO) dropped 2.1%, and Intel (INTC) fell 1.6%.

These declines occurred despite Taiwan Semiconductor Manufacturing Company (TSMC) reporting better-than-expected profits on Thursday, demonstrating the ongoing strength of AI chip demand.

Despite the current turmoil, analysts maintain an optimistic long-term outlook for Nvidia. According to TipRanks, NVDA stock holds a “Strong Buy” consensus rating based on 37 Buy and five Hold ratings.

The average Nvidia price target stands at $170.78, suggesting a potential upside of 68.27% from current levels. This indicates that while the export ban presents a significant short-term challenge, many analysts believe in Nvidia’s ability to navigate these obstacles.

Nvidia closed at $101.49 on Thursday, down 2.87% for the day. The stock slipped an additional 0.21% in after-hours trading.