Nvidia faces new export license rules for selling chips to China and other countries.
The Trump administration’s decision could impact Nvidia’s revenue. Its stock sank Wednesday.
Analysts predict this move by the Trump administration could bring better news in the near future.
Wall Street analysts had some choice words for the latest shake-up to Nvidia’s regulatory landscape — “disruptive,” “surprise,” and “abrupt,” just to name a few. Bernstein analysts went so far as to say “The Trump rug remains in full effect.”
New rules regarding Nvidia’s Chinese business surprised many company stakeholders this week. On Tuesday, after market close, the company announced that it had been informed that the Trump administration would require a new license for all accelerated chips shipping to China and a small group of other countries including Russia.
Nvidia said it would take a charge of up to $5.5 billion in inventory, purchase commitments, and reserves in the first quarter, which ends on April 27.
“Based on our discussions, this is effectively a ban,” wrote UBS analysts in a note to investors Tuesday.
Even those analysts unwilling to read the disclosure as a full-on ban said any licensing process is likely to be lengthy, so revenue from Nvidia’s H20 chip, the one the company designed specifically to meet Biden-era export restrictions, is expected to be minimal for the foreseeable future.
“This is not a ban; it’s a licensing requirement, but again, the inventory write-down suggests that the company is not optimistic about being granted licenses,” Morgan Stanley analysts wrote.
At the time of writing, the regulation has not appeared in the Federal Register or the Department of Commerce website, so all analyst reactions are related to Nvidia’s disclosure. The company’s stock was down more than 7% from Tuesday to Wednesday market close.
A spokesperson from Nvidia declined to comment.
Nvidia priced the charges it will likely incur in the first quarter (ending April 27) at $5.5 billion. However, there was no warning about the company’s first-quarter results, which will be announced on May 28. Though China sales will almost certainly be lower than expected, several analysts expect the company may still be able to meet revenue targets for the first quarter.
“Given the strong demand for H200 chips since DeepSeek’s launch, we think NVDA could offset somewhat lost China H20 revenues,” BNP Paribas analysts wrote. The same analysts estimated Nvidia’s China data center business constitutes 10% to 12% of Nvidia’s total revenue.
