Investors should prepare for “potential significant new China AI and export license restrictions” from the Trump administration, a Wall Street analyst said Friday. The news is likely to weigh on Nvidia (NVDA) stock and other AI chipmakers.
In a client note Friday, Mizuho Securities analyst Vijay Rakesh said he expects the new restrictions to come in the weeks ahead after a couple of new administration appointees are confirmed.
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“We believe, based on industry headlines and checks with our Washington group, there could be significant AI restrictions coming,” Rakesh said. He cited the pending nominations at the Department of Commerce of Landon Heid for assistant secretary and Jeffrey Kessler for undersecretary at the Bureau of Industry and Security.
The appointments could lead to “a complete ban of all AI chips to China,” Rakesh said. That would impact Nvidia’s H20 and B20, which are currently permitted for sale in China. Those processors have lesser capabilities compared with Nvidia’s top-of-the-line AI processors.
The potential impact to Nvidia for fiscal 2026 could be a reduction in revenue of $4 billion to $6 billion. It could also entail a cut to earnings per share of 13 cents to 18 cents, Rakesh said.
“We believe the restrictions could extend 1) to potentially all China AI chip exports, and some legacy chips also included, 2) and could impact export licenses to countries with strong relationships to China,” he said.
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In fiscal 2025, China accounted for about 13% of Nvidia’s total revenue, or about $17 billion including about $10 billion-plus in AI revenue.
Broadcom (AVGO) also would be affected because it has a custom AI chip project with China’s ByteDance, Rakesh said.
In morning trades on the stock market today, Nvidia stock initially fell but later reversed. In recent trades, Nvidia stock was up more than 2% to 122.93.
Meanwhile, Broadcom stock was up more than 1% to 199.92 in recent trades.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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