Pla2na
Nvidia (NASDAQ:NVDA) has experienced the brunt of the pain following the imposed trade restrictions for selling H20 GPUs to Chinese customers. Despite the existing policy being baked into consensus estimates for eQ2'26, I suspect that a trade
Nvidia Stands To Benefit From Positive U.S. And China Trade Talks
Summary
- I reiterate my 'Strong Buy' on NVDA with a $260 price target, expecting a US-China trade deal to unlock significant H20 GPU sales; the US needs Chinese rare earth elements.
- Nvidia's NVLink Fusion and Spectrum-X are expanding revenue streams, with major hyperscalers like Microsoft and Meta increasing capital spend on compute capacity.
- Despite Q1'26 margin hits from China trade restrictions, I forecast improving gross margins and $48B net revenue for eQ2'26, driven by Blackwell architecture.
- Risks remain from geopolitical tensions between China and Taiwan as well as NVDA shares' premium valuation, but Nvidia's AI leadership and potential China revenue recovery justify the current premium.
Michael Del Monte is a buy-side equity analyst with over 5 years of industry experience. Prior to working in the investment management industry, Michael spent over a decade in professional services working across industries that include O&G, OFS, Midstream, Industrials, Information Technology, EPC Services, and consumer discretionary.Investment recommendations are built upon the entirety of the investment ecosystem rather than considering a company independently.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of NVDA, MRVL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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