Despite a 14% drop caused by the recent H20 export ban to China, Nvidia (NASDAQ:NVDA) looks set for a potential rebound. Analysts at Bank of America remain optimistic, maintaining a Buy rating and emphasizing the attractive valuations against long-term prospects.

Challenges Now Mostly Priced In

1. Impact of China Sales

   • Exports to China made up approximately 13-14% of Nvidia’s total revenue.

   • The potential reduction in data-center sales has already factored in a cut of 3-6%. Analysts believe this risk is now largely de-risked.

2. Impending AI Regulations

   • New regulations may come into effect around May 15.

   • Worst-case scenarios could result in a decline of 10% in sales and up to 11% in EPS.

3. Gross Margin Pressures

   • Current inflation is putting stress on profit margins.

   • BofA predicts a rebound in margins in the second half of the year as products such as Blackwell and Blackwell Ultra ramp up.

4. Cloud CapEx Expectations

   • There is uncertainty regarding cloud spending from service providers for 2026.

   • Guidance appears to be a few quarters away.

Valuation and Future Potential

• Price Ratios: Currently, Nvidia trades at a 19x CY26 P/E, significantly below the historical average of 30x.

• EPS Estimates: Updated forecasts for Fiscal 2026/2027 account for all potential China and H20 drops.

• Updated Price Target: Lowered to $150 from a previous $160, yet BofA considers the current market volatility as a clear buying opportunity.

Monitor Nvidia’s Profitability Metrics

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