Bernstein on NVIDIA (NVDA): New controls 'challenging but at first blush they seem workable'

Bernstein SocGen Group analyst Stacy Rasgon reiterated an Outperform rating and $175.00 price target on NVIDIA (NASDAQ: NVDA).

The analyst commented: "We believe NVDA’s H20 shipments to China should be unaffected by the new controls as they only seem to apply to components already impacted by prior controls (the H20 is low enough performance to be exempt from restrictions). We are unsure if there will be impact to AVGO’s Bytedance AI ASICs as frankly we don’t know the performance level of them or where they are currently being shipped (though we do not think Bytedance revenues are material at this point). Sizing overall impact to NVDA from the new controls is challenging but at first blush they seem workable (most of their large customers will likely be in favored areas anyway, and it seems like sovereigns should be able to build out clusters at least 100K in size assuming they apply for NVEU status which seems like a reasonable assumption). However, they do seem clearly disruptive, and likely off-putting to countries who might not be on the favored list but who are clearly allies. We don’t know what the incoming Trump administration will do with this either; putting them in place a week before the inauguration seems like a bit of dirty pool on the part of the Biden administration. We suppose a roll-back is possible but have no insight at this point. We will be digging further through the new rules. We make no changes to our ratings or estimates at this time."

For an analyst ratings summary and ratings history on NVIDIA click here. For more ratings news on NVIDIA click here.

Shares of NVIDIA closed at $135.91 yesterday.

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