Analysts revise Nvidia price target on chip demand

Yahoo

28-04-2025

An "indefinite future" refers to a time that is not clearly defined, determined, or specific.
It's kind of like the old Johnny Mathis song "The Twelfth of Never" only without the music, but the idea is the same: Don't hold your breath.
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Nvidia () got that message earlier this month when the U.S. government told the AI-chipmaking colossus that it would need to obtain a license to export its H20 chips to China, including Hong Kong and Macao.
As a result, Nvidia said it expects to take a $5.5 billion charge in its fiscal 2026 first quarter due to H20 chip inventory, purchase commitments, and associated reserves.
"The USG informed the Company that the license requirement will be in effect for the indefinite future," Nvidia said in a regulatory filing.
Nvidia shares are down 17.4% in 2025 as the Santa Clara, CA-based tech giant got whacked a series of unfortunate events, starting with the arrival of DeepSeek, the Chinese AI company the produces large language models (LLMs) that are a lot cheaper than its competitors.
Then, President Donald Trump announced his global tariff agenda that pushed levies on Chinese goods to 145%. China raised its reciprocal tariffs to 125% for all goods originating from the United States in response to Trump's move.
Trump later said the tariffs levied against China were going to be substantially decreased.
Nvidia's stock took another drubbing after reports emerged that Chinese tech titan Huawei was ramping up production of its AI chips, potentially impacting Nvidia's market share in China.
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Nvidia has been the dominant player in the Chinese AI chip market, but U.S. export restrictions have limited the company's ability to supply their most advanced chips. Huawei is looking to capitalize on the restrictions by offering a competitive AI chip to the Chinese market.
Huawei plans to begin mass shipments of its advanced 910C artificial intelligence chip to Chinese customers as early as next month, according to Reuters.
The timing is fortuitous for Chinese AI companies which have been left scrambling for domestic alternatives to Nvidia H20.
So, all in all, it's probably fair to say that, so far, 2025 hasn't been a banner year for Nvidia. But there's some good new on the horizon.
China appears to have rolled back their retaliatory tariffs of 125% on some semiconductors made in the US, CNN reported on April 25. The exemptions, which have not been officially announced, apply to integrated circuits, also known as microchips or semiconductors.
In addition to semiconductors, China has decided to grant exemptions on some aircraft parts, including engines and landing gear.
While China has made strides in developing its own semiconductor industry, it is still highly dependent on imports of chips and chipmaking equipment from the U.S., Taiwan, South Korea, Japan and the Netherlands.
Last year, China imported $11.7 billion worth of semiconductors from the U.S.Meanwhile, Nvidia and Amazon () executives said that the construction of artificial intelligence data centers is not slowing down, as recession fears have some investors questioning whether tech companies will pull back on some of their plans, according to CNBC.
'There's been really no significant change,' Kevin Miller, Amazon's vice president of global data centers, said at a conference organized by the Hamm Institute for American Energy. 'We continue to see very strong demand, and we're looking both in the next couple years as well as long term and seeing the numbers only going up.'
Miller said 'there's been little tea leaf reading and extrapolating to strange results' about Amazon's plans.
Nvidia, which reports quarterly results on May 28, is also not seeing signs of a slowdown, said Josh Parker, the chipmaker's senior director of corporate sustainability.
He added that Nvidia sees compute and energy demand only rising due to AI, describing the reaction to DeepSeek as 'kneejerk.'
Morgan Stanley analysts are worried about an AI slow down. The firm lowered its price target on Nvidia to $160 from $162 while keeping an overweight rating on the shares.
As investor sentiment is worsening based on macro and supply chain risks, Morgan Stanley said, core demand for GPUs has shot higher in the last four weeks amid a shortage of inference chips across most of the relevant LLMs, in all geographies.
Morgan said that the idea that "we are in a digestion phase for AI is laughable given the obvious need for more inference chips which is driving a wave of very strong demand."
'While Wall Street is wringing its hands over a laundry list of very real concerns, Silicon Valley focus has shifted to a very different challenge — growth in tokens generated of (by some accounts) more than 5X since the beginning of the year is very much straining the ecosystem and is driving a surge in investment to handle these workloads," the firm said.
Near-term estimates are capped by export controls and still limited by Blackwell supply, referring to Nvidia's new line of processors, but that is ramping quickly, the firm said.
Morgan Stanley said Nvidia remains a top pick.Sign in to access your portfolio