The Trump administration reportedly has backed off plans to impose further restrictions on the computer chips Nvidia can sell to China. That has removed a big overhang on Nvidia stock, analysts say.
The White House has decided not to impose curbs on sales of Nvidia's H20 graphics processing unit in China, NPR reported Wednesday. The H20 is the most powerful artificial intelligence chip that Nvidia is allowed to sell in China. It is less capable than the Blackwell series chips Nvidia sells in the U.S. and other markets.
The White House reversed course on its plans to restrict H20 sales after Nvidia CEO Jensen Huang attended a dinner with Trump at Mar-a-Lago last week, NPR said.
"If NPR's reporting is accurate, this news is a significant positive for Nvidia, as well as a more modest tailwind for other portions of the server supply chain," Wedbush Securities analyst Matt Bryson said in a client note Thursday.
Bryson rates Nvidia stock as outperform with a price target of 175.
On the stock market today, Nvidia stock fell 5.9% to close at 107.57. The pullback follows a gain of 18.7% on Wednesday after President Donald Trump announced a 90-day pause on most reciprocal tariffs.
"China demand for AI servers (and in part H20-powered AI systems) has spiked significantly since the launch of DeepSeek with growth accelerating through February and March," Bryson said.
The Nvidia sales growth in China was partly fueled by buyers stocking up ahead of a potential ban, he said. But AI computing demand overall is still strong in China, he said.
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Decision Removes Overhang On Nvidia Stock
"Losing all H20 (sales) would not be good for Nvidia," Mizuho Securities trading-desk analyst Jordan Klein said in a client note Thursday. "It was one pending risk or overhang keeping some investors away from Nvidia."
Chinese internet service giants including Alibaba, ByteDance and Tencent have placed an estimated $16 billion in H20 orders in 2025 already, he said.
Meanwhile, Morgan Stanley analyst Joseph Moore on Thursday reiterated his "top pick" buy rating on Nvidia stock with a price target of 162.
"We think sustained AI spend and Nvidia's relative supply chain flexibility will help them outperform, even in a higher tariff environment," Moore said in a client note.
Broadcom Stock Ranks First, Nvidia Third
Elsewhere in the AI chip market, Broadcom should benefit from Google's seventh-generation TPU, or Tensor Processing Unit, Jefferies analyst Blayne Curtis said in a client note.
Google, a unit of Alphabet, announced the new chip, called Ironwood, on Wednesday at its Google Cloud Next event in Las Vegas.
Google developed Ironwood with fabless chipmaker Broadcom, Curtis said. Ironwood is designed for training and large model inference workloads and is expected to be available later this year.
"At first pass, the specs appear impressive, and altogether we view this as an important step in validating the ability for Broadcom's ASIC (application-specific integrated circuit) road maps to keep pace with Nvidia," Curtis said.
Curtis maintained his buy rating on Broadcom stock with a price target of 300. On Thursday, Broadcom stock dropped 6.9% to close at 172.30 amid the market upheaval caused by the Trump tariffs.
Broadcom ranks first out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup. Nvidia stock ranks third in the group.
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