Nvda Stock- Nvidia’s $15B Setback: Can CoreWeave and Musk Ventures Fill the Gap?

Nvda Stock- How U.S. Restrictions Could Cost Nvidia $15 Billion in Revenue

Nvda Stock– Despite geopolitical and regulatory headwinds, analysts remain optimistic about AI chip demand—especially for leading names like Nvidia and Broadcom—as hyperscale companies continue pouring billions into AI development.

Strong Capex Spending from Cloud Giants

Melius Research analysts pointed out that recent earnings from tech giants have been reassuring. According to their statement, “Capital expenditures from hyperscale companies remained unwavering,” a factor that reinforces the investment case for major tech companies like Nvidia (NVDA) and Broadcom (AVGO). This continued spending is seen as a crucial pillar supporting the future growth potential of AI chip manufacturers.

The stability in capital expenditures by these companies indicates that demand for AI and high-tech products is expected to continue growing, with these sectors remaining key drivers of future technological advancements. This is especially significant for AI chipmakers who are heavily dependent on sustained investments in infrastructure and technology development.

China Restrictions Add Pressure on Nvidia

Nvidia is currently grappling with new restrictions imposed by the U.S. government that affect its H20 chips, which are no longer permitted to be sold in China. These restrictions, a continuation of the Trump administration’s export policies, have put a significant dent in Nvidia’s potential revenue from one of its largest markets. According to analysts, the impact could be substantial, with Nvidia possibly losing over $15 billion in annual revenue as a result of these sales curbs. This poses a serious challenge for Nvidia, especially considering its strong reliance on international markets, including China, where demand for advanced chips has been robust in recent years.

The H20 chip was one of Nvidia’s most promising products in terms of sales, particularly for use in artificial intelligence (AI) applications and large-scale computing systems. Losing access to such a significant market as China creates an immediate revenue shortfall for the company. Analysts are cautious about the potential long-term impact of this move, as it cuts off a crucial revenue stream that Nvidia had relied on for growth.

Waiting on Biden’s AI-Diffusion Rule

Nvidia is also awaiting clarity on the Biden administration’s pending “AI-diffusion” rule. This policy will regulate access to U.S. AI technology based on country classifications. Melius noted: “We are optimistic Trump’s team will make the rule simpler but are growing more concerned that it will take a similarly restrictive approach that companies like Nvidia will need to navigate.”

Near-Term Outlook: Blackwell Chip Sales Drive Momentum

Despite the China setback, Nvidia is expected to post revenue upside in the April quarter, thanks to pre-ban H20 sales and robust demand for its new Blackwell chips among U.S.-based hyperscalers. Melius analysts believe these sales helped balance the short-term revenue picture.

However, the real challenge may hit in the July quarter, when the H20 ban could cause a revenue hit of $4–5 billion. Melius suggests that Nvidia’s sales might remain flat for the quarter. Yet, growth could bounce back in the October and January quarters, driven by Blackwell chip deliveries to Tier 1 and Tier 2 cloud providers.

Positive Long-Term Trends Remain Intact

Even with the current uncertainties, Melius Research emphasizes Nvidia’s long-term strength. The firm pointed to “reasoning models and inferencing trends” as tailwinds and highlighted that Nvidia has clear visibility into hyperscaler orders through the end of the year.

Importantly, all major cloud providers have reiterated their commitment to AI-related spending, which reassures investors. Nvidia’s keynote at the upcoming Computex trade show in mid-May is expected to offer further insights into its product roadmap and AI strategy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.