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Wall Street has cut earnings estimates for Nvidia (NVDA, Financials) just ahead of its fiscal first-quarter report, as the chipmaker faces pressure from a U.S. export ban on advanced AI chips to China. Analysts now expect adjusted earnings of $0.73 per share on $43.34 billion in revenue for the quarter ended April 27, down from $0.88 per share just a week earlier, according to FactSet.
The company previously warned of a potential charge of up to $5.5 billion for H20 chips blocked from being sold in China, a key issue investors will scrutinize in the earnings report. But more attention is on Nvidia's fiscal second-quarter guidance. Mizuho's Jordan Klein said estimates could fall as low as the low $40 billion range, compared to the Street consensus of $45.92 billion, as the sales ban may shave $5 billion to $8 billion from quarterly revenue.
To mitigate losses, Nvidia plans to begin producing a new, China-compliant AI chip in June using GDDR7 memory in place of restricted HBM technology, according to Reuters. Despite these challenges, shares rose 3.3% to $135.59 on Tuesday and are nearing a technical buy point of $137.40.
Market watchers remain focused on demand for Nvidia's new Blackwell chips. Wedbush's Daniel Ives called the upcoming results pivotal for global investor sentiment, referring to CEO Jensen Huang as the Godfather of AI. Morgan Stanley's Joseph Moore cautioned that current consensus numbers may be stale, suggesting downside risk if the H20 ban impact hasn't been fully modeled in.
Still, Piper Sandler's Harsh Kumar believes the selloff risk is limited, calling this the likely last wave of negative news for Nvidia this year. He remains optimistic on second-half growth, driven by increased spending from cloud providers and government AI projects.
Investors will be watching Wednesday's report closely for updates on China exposure, new product ramp timelines, and second-quarter sales guidance. See insider activity on Nvidia:
This article first appeared on GuruFocus.