Nvidia Corporation NVDA will take a multibillion-dollar hit tied to U.S. export restrictions, but a top analyst says the long-term story remains intact.
What Happened: On Tuesday, Nvidia said it would take a $5.5 billion charge this quarter related to halted shipments of its H20 graphics processing units to China and several other markets.
The announcement comes after the U.S. government informed the company on April 9 that it would now require a license to export those chips.
According to Benzinga Pro data, shares of Nvidia fell 6.33% in after-hours trading on Tuesday.
Wedbush Securities analyst Dan Ives weighed in on the development, urging investors to maintain perspective.
"The Nvidia China restriction news that just hit will put pressure on shares and it's a concern…BUT this is all part of the high game of poker going on between U.S. and China," he said in a post on X, formerly Twitter.
"I am not overly concerned by this news despite the headline," he added. "Nvidia remains caught in the tariff spiderweb between [the] U.S. and China. Street knows this. Need to look thru this period of vol and news and see [the] forest thru trees. Nvidia only chip in world fueling AI Revolution..demand."
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Why It's Important: The latest Nvidia licensing mandate seems to mark another escalation in the ongoing trade tensions with China. While President Donald Trump recently held off on imposing reciprocal tariffs on most nations, he increased tariffs specifically targeting China.
In response, China retaliated over the weekend with tariffs as high as 125% on U.S. products.
Earlier, Goldman Sachs warned that a potential U.S.-China decoupling could spark a massive $2.5 trillion market sell-off.
In February, it was reported that Chinese tech heavyweights Tencent Holdings TCEHY, Alibaba Group Holdings BABA, and ByteDance have ramped up their orders for Nvidia's H20 AI chips, driven by soaring demand for AI computing power fueled by the rise of DeepSeek's cost-effective AI models.
The DeepSeek R1 AI model, reportedly developed for under $6 million, has outperformed leading U.S. models—including those from OpenAI.
In March, Chinese server manufacturer H3C flagged a potential shortage of Nvidia’s H20 chips. The company also warned that supply plans beyond April 20 remain uncertain due to shifting raw material policies, logistical disruptions, and manufacturing difficulties.
Price Action: Nvidia shares are down 18.88% so far this year but have still climbed 30.47% over the past 12 months, as per Benzinga Pro data.
According to Benzinga Edge Stock Rankings, the company holds a strong growth score of 94.82%. Click here to compare it with Alibaba, Tencent, and other major players.
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