Nvidia (NVDA -9.70%) shares fell more than 7% on Wednesday morning, after the company disclosed new export restrictions on its artificial intelligence (AI) chips. Specifically, the company must now obtain licenses from the U.S. government to sell its H20 processors in China.
However, Nvidia doesn’t expect those licenses to be forthcoming. The company plans to take a $5.5 billion charge related to “H20 products for inventory, purchase commitments, and related services” in the first quarter of fiscal 2026 (which ends April 27), according to a regulatory filing.
Nvidia stock now has plummeted 30% from the record high it reached in January. Should investors buy the dip?
Nvidia faces new export restrictions that will further harm its China business
Nvidia has been navigating export restrictions in China for several years. In 2022, the Biden administration prohibited the company from selling its most powerful artificial intelligence (AI) accelerators, A100 and H100 graphics processing units ( GPUs), to Chinese businesses due to concerns about their military applications. Nvidia responded by tweaking its A100 and H100 architectures to build less powerful chips that complied with export requirements.
Those processors, called A800 and H800, were adopted by several Chinese technology companies, including Alibaba, Baidu, and Tencent. However, in 2023, the Biden administration restricted the sale of those processors in China.
Next, Nvidia developed an even less powerful Hopper GPU called the H20 that complied with latest export curbs, but the Trump administration has now effectively prohibited the sale of those processors in China, too. In total, Bloomberg Intelligence estimates that the latest restrictions will cost the company between $14 billion and $18 billion in revenue in fiscal 2026.
While Nvidia has reported exceptional financial results since the generative AI boom began in late 2022, export restrictions have still taken a severe toll. China accounted for over 26% of total revenue in fiscal 2022 but just 13% of total revenue in fiscal 2025. Put differently, total sales increased at 69% annually during that period, but revenue from China increased at just 34% annually.
Many Wall Street analysts remain bullish on Nvidia despite the latest export restrictions
Nvidia announced the H20 export controls on April 15 in a regulatory filing that told investors the licensing requirements will remain effective “for the indefinite future.” Several analysts subsequently revised their target prices lower on April 16, as detailed below:
- Vivek Arya at Bank of America cut his forecast to $160 per share, down from $200.
- Harsh Kumar at Piper Sandler cut his forecast to $150 per share, down from $175.
- Srini Pajjuri at Raymond James cut his forecast to $150 per share, down from $170.
However, several analysts maintained their target prices despite the latest export controls, including those at Cantor Fitzgerald, Evercore, and Wedbush. Likewise, Joseph Moore at Morgan Stanley reiterated Nvidia as his “top pick” in the semiconductor space. In total, the median target price declined from $175 per share to $170 per share, but that still implies 63% upside from its current share price of $104.
Dan Ives at Wedbush urged investors to “look past the chaos.” He believes Nvidia is the only chipmaker in the world that can supply the processors required to run the most advanced artificial intelligence applications. He said the financial impact would be “relatively small,” but acknowledged the restrications are still a strategic blow for the company.
More analysts may lower their forecasts in the coming days, but the average estimate currently calls for Nvidia’s earnings to increase 51% in fiscal 2026. That consensus makes the current valuation of 35 times earnings look cheap. Patient investors should consider buying a small position in Nvidia stock now.
Bank of America is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Baidu, Bank of America, Nvidia, and Tencent. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.