Veteran Fund Manager Adjusts Nvidia Stock Price Target Post Export Controls
Nvidia’s shares plummeted by 7% after the company issued a troubling warning about increased costs related to export controls on China, a legislative remnant from the Trump administration. In a recent filing, Nvidia disclosed a whopping $5.5 billion charge tied to the requirement for a U.S. government license for shipments of its H20 graphics processing units (GPUs) to China and various other nations. This situation has arisen under the current Biden administration, which has taken regulatory steps to ensure compliance with earlier restrictions that barred sales of advanced AI processors to the Chinese market.
The Future of the H20 Chip
The H20 chip was developed with the intention of generating significant revenue, with anticipated sales ranging between $12 billion and $15 billion for the 2024 fiscal year. However, this bold projection is now cast into doubt due to the newly instated export regulations. Wall Street cannot escape the pressures stemming from both geostrategic and economic uncertainties that continue to rattle investor confidence.
Nvidia’s Stock Performance and Broader Market Impact
This latest disclosure adds to Nvidia’s declining fortunes, which have seen a considerable 22% drop in 2025. Several factors contribute to this dismal outlook:
- The emergence of DeepSeek, a cheaper and competitive Chinese AI model.
- Disappointing earnings reports.
- A broader market downturn attributed to ongoing economic uncertainties.
Wall Street’s Response
In the wake of this turbulence, analysts are reevaluating Nvidia’s potential in the market. Chris Versace, the lead fund manager at TheStreet Pro Portfolio, expressed that Nvidia risks becoming a “pawn in Trump’s negotiating with China.” He holds a pessimistic view on the pace of U.S.-China trade discussions and predicts that other countries may be prioritized for trade agreements to increase pressure on China.
Price Target Adjustment
As a result of these factors, Versace has adjusted Nvidia’s price target downward from $175 to $150. Nevertheless, he maintains a “Buy Now” rating, underscoring Nvidia’s robust positioning in artificial intelligence and data center growth. He also noted the possibility for margin improvements as manufacturing of their Blackwell chips matures.
Versace pointed out that while the immediate quarter might not feel a significant impact, subsequent quarters are poised to experience more pronounced repercussions. He advised stakeholders to revisit Nvidia’s potential after the upcoming quarterly results from Taiwan Semiconductor (TSMC) to gain a clearer picture of market dynamics.
Other Analyst Insights
Prior to Nvidia’s recent announcements, analysts from DA Davidson also revised their stance, lowering their price target from $125 to $120 while maintaining a neutral rating. They caution about the risks associated with potential negative GDP growth, projecting that such conditions could drag down growth expectations and valuations.
The firm additionally anticipates a slowdown in both consumer and corporate investments, regardless of the outcomes of ongoing tariff deliberations.
Conclusion
Nvidia’s story is unfolding against a backdrop of tension in U.S.-China relations, a turbulent economic environment, and competitive pressures from emerging technologies. Traditional financial wisdom posits that companies well-positioned in essential sectors will ultimately prevail. Whether Nvidia can navigate these challenges will depend on its ability to adapt swiftly and capitalize on its technological prowess while managing external pressures. Investors would do well to keep a vigilant eye on both the geopolitical landscape and Nvidia’s operational responses in the coming months.
