From Morningstar: 2025-04-16 04:01:00

Nvidia expects to write off $5.5 billion due to US restrictions on its H20 AI GPU for China, causing a 6% share drop. The US aims to lead the AI race with these measures reducing China’s revenue from Nvidia. Uncertainty remains, with a lowered fair value estimate and concerns over tariffs and geopolitical tensions affecting chipmakers.

The $5.5 billion write-off will relate to inventory and purchase commitments for the H20, which may not find buyers in developed markets. Revenue estimates are cut to exclude China, with tariffs and AI expansion concerns impacting Nvidia’s long-term outlook. Very high uncertainty remains, but ongoing AI investments could support GPU sales.

Nvidia’s fair value estimate is lowered to $125 from $130, reflecting reduced revenue without China. Geopolitical tensions and tariff concerns persist, shaping the future of AI expansion. Investors await insights from Nvidia’s earnings call in May regarding restrictions and AI spending trends. Morningstar does not own shares in any mentioned securities.



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