Nvidia Faces Limited H20 Chip Supply Amid US Ban

Nvidia faces limited supply of H20 chips due to a US sales ban, disrupting its supply chain and customer relations. Analysts predict an average target price of $183.08 with a high estimate of $372.87 and a low estimate of $100.00. The company's average brokerage recommendation is 1.8, indicating "Outperform" status. The estimated GF Value for Nvidia in one year is $280.31, suggesting a 62.58% upside from the current price.

Nvidia (NVDA) is experiencing significant supply constraints in China, impacting its sales prospects. The company had temporarily halted the sale of its H20 graphics processing units (GPUs) in the country due to a sales ban imposed by the U.S. government. However, recent developments suggest that the ban has been lifted, and Nvidia is resuming sales.

The demand for H20 GPUs in China is robust, with major players like ByteDance and Alibaba expressing interest. Nevertheless, Nvidia's limited production capacity is a bottleneck in meeting these orders swiftly. According to Wall Street analysts, the average one-year price target for Nvidia is $183.08, with a high estimate of $372.87 and a low estimate of $100.00. This suggests an average upside potential of 6.19% from the current trading price of $172.41 [1].

Brokerage firms collectively rate Nvidia with an average recommendation of 1.8, indicating an "Outperform" status. GuruFocus estimates place the GF Value of Nvidia at $280.31 in one year, suggesting a 62.58% upside potential from its current price of $172.41 [2].

Nvidia's CEO, Jensen Huang, downplayed his role in the lifting of the ban and emphasized that the decision was entirely in the hands of the U.S. and Chinese governments. He noted that the H20 chip's memory bandwidth makes it a good fit for AI models being developed in China. Huang also highlighted the release of the new RTX Pro graphics chip, which he said would power the development of humanoid robots [3].

The company's market capitalization has reached $4 trillion, driven by investor optimism in the AI sector. Specialized chips from Nvidia are crucial for training large AI models, fueling immense demand for its products. Analysts predict an average price target of $178.32, implying an 8.12% upside from the current market price, and GuruFocus estimates the GF Value at $280.31 in one year, suggesting a 69.97% upside potential [3].

While Nvidia's growth is impressive, the question remains whether it is driving the S&P 500 Index alone. The index's valuation is a complex issue with varying perspectives, and while some experts argue for overvaluation, others believe the market is still reasonable given current economic conditions [1].

References:
[1] https://www.gurufocus.com/news/2988971/nvidia-nvda-faces-supply-challenges-amid-high-demand-for-h20-gpus-in-china
[2] https://apnews.com/article/china-nvidia-jensen-huang-h20-1d17b1c8440ca51498e2a8ea9b0d85c6
[3] https://www.ainvest.com/news/nvidia-reaches-4-trillion-market-cap-boosting-500-tariff-concerns-2507/