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Nvidia (NVDA) is retreating 4% after an analyst at Japanese bank Mizuho warned that the U.S. could eventually prevent the tech giant from selling any of its chips to Chinese entities.
A Total Ban Could Be Imposed
The Biden administration prevented NVDA and its peers from shipping their most advanced chips to China, and the Trump administration is mulling over the idea of increasing the number of NVDA chips that cannot be shipped to China without licenses, Bloomberg reported last week. What's more, the administration is also pressuring its allies to put curbs on the export of chip-making equipment to the Asian country.
But Mizuho analyst Jordan Klein recently suggested that Washington could decide to "ban every and all NVDA chip sales into China." Such a move could cause analysts to cut their revenue and earnings per share estimates for the company for this year by $4 billion to $5 billion and 18 cents, respectively, according to Klein.
Klein Remains Bullish on NVDA
Despite Klein's warning about Washington possibly banning all sales of NVDA's chips to China, he remains upbeat on the company's overall outlook. That's because the analyst believes that the shares already reflect a decline in the company's revenue from China.
Klein thinks that the stock has a better chance of rising in the second half of the year.
While we acknowledge the potential of NVDA, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.