What AMD's Earnings Could Mean for Nvidia
Key Takeaways
- After Advanced Micro Devices said it expects a $1.5 billion hit to 2025 revenue due to curbs on its sales to China, UBS analysts warned rival Nvidia faces the same headwinds.
- Nvidia could face an impact of $5 billion to $7 billion per quarter, the analysts said.
- Last month, Nvidia said it expects to take a $5.5 billion charge in its fiscal first quarter, with the results due May 28.
- The Trump administration reportedly plans to repeal AI diffusion rules set to take effect on May 15 that would have further limited sales to a broader set of countries.
- However, the Commerce Department is expected to continue enforcing existing restrictions while it develops a new rule, Bloomberg reported Wednesday.
After Advanced Micro Devices (AMD) said it expects a $1.5 billion hit to revenue this year due to tightening restrictions on its sales to China, UBS analysts warned rival Nvidia (NVDA) faces the same headwinds.
AMD’s anticipated revenue hit is “bigger than we expected and over a shorter period of time than we would have thought,” UBS analysts said Wednesday. If AMD takes a $1.5 billion hit, Nvidia could face an impact of $5 billion to $7 billion per quarter, the bank said.
That “would take away almost all of the ‘fat’ that we believe NVDA had,” for its fiscal second quarter, which runs through July, UBS said.
Last month, Nvidia said it expects to take a $5.5 billion charge in its fiscal first quarter after the U.S. implemented a licensing requirement for Nvidia to sell its H20 chips to China. At the time, Morningstar analysts said, “China has shrunk to about 10% of Nvidia’s revenue from 20%, and we now expect it to go to close to zero.” Nvidia is scheduled to post its first-quarter results on May 28.
Bloomberg reported late Wednesday that the Trump administration plans to repeal AI diffusion rules set to take effect on May 15 that would further limit sales of American AI hardware to a broader set of countries. However, the Commerce Department is expected to continue enforcing existing restrictions while it develops a new rule, the report said.
Nvidia Could Miss Out on $50 Billion China Market, CEO Huang Says
Speaking at the Milken Institute Global Conference on Tuesday, Nvidia CEO Jensen Huang made a case against the restrictions on selling to the Chinese market.
Nvidia being barred from selling in China won’t stop the country from developing its own chips, Hunag said. “No government, especially the government of our adversaries, are limited by the available capacity of computing for their military reasons,” he said, adding that China-based Huawei is a “formidable” company.
Huang said he expects the market for AI chips in China will reach $50 billion within a few years. “Fifty billion dollars is like Boeing. Not a plane—the entire company,” Huang said.
Shares of AMD added close to 2% Wednesday, while Nvidia shares climbed 3%. They’ve lost about 17% and 13%, respectively, since the start of the year.