UBS now sees less upside for Nvidia following the company’s warning. Earlier this week, Nvidia said it will record a $5.5 billion charge tied to exporting H20 graphics processing units to China, among other destinations. Nvidia said in a regulatory filing that the U.S. government informed the company it would require a license to export the chips to several countries, including China. This led UBS to lower its price target for Nvidia to $180 from $185. Analyst Timothy Arcuri’s new forecast still implies a 72% upside for the stock. “Following our initial take on the newly issued licensing requirements for NVDA’s H20 GPU, we have clarified with management the impact of these restrictions on NVDA’s P & L, and are updating our model accordingly,” the analyst wrote. Other company-specific risks for the company that Arcuri highlighted include mounting competition from rivals such as Advanced Micro Devices and Intel. “In addition, NVIDIA faces the semiconductor sector risk where revenue trends have historically been linked to corporate profitability, which could be challenged for robust growth, as the economic recovery has been more subdued vs. prior deep downturns,” he added. Shares of Nvidia have tumbled 22% this year. Arcuri also cut his price target for rival semiconductor stock Advanced Micro Devices to $155, underscoring that this ban may have an even larger effect on AMD. “AMD announced that its MI308 products (China-specific GPUs) are now subject to similar license requirements to the H20 (which we believe also carry a presumption of denial – effectively a ban),” the analyst wrote. “AMD consequently expects to recognize charges of up to $800MM in inventory, purchase commitments and related reserves.” Arcuri specified that this implies a $1 billion revenue impact, assuming that $500 million of these charges are related to inventory and when assuming an approximate 50% gross margin. Shares of Advanced Micro Devices are down 27% this year. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
