Nvidia Analyst Reverses Course A Week After China Ban Workaround Speculation

• Mizuho analyst Vijay Rakesh lowered the price target on Nvidia Corp (NASDAQ: NVDA) to $205 from $225 and kept a Buy rating.

• U.S. hyperscale "remains strong" into the end of 2022, with modest "pushbacks," but the first half of 2022 could see a potential slowdown.

• He believes some hyperscalers could start to see a slowdown into the end of 2022 due to macro concerns.

• His checks show hyperscale orders are seeing "pushbacks," but no cancels, with Q3 trending flat quarter-over-quarter and Q4 "potentially soft."

• Rakesh said a Europe-China slowdown, Memory (DDR5), and PCIe Gen5 are key Server concerns as broad-based chip supply has improved considerably.

• Rakesh maintained Advanced Micro Devices Inc (NASDAQ: AMD) with a Buy and cut the price target from $140 to $125.

• Rakesh lowered estimates for AMD "with macro headwinds clouding the near-term outlook."

• He sees the strength in Data Centers slowing and adverse effects from the ban on sales into China affecting both companies near term.

• Longer-term, he still sees AMD and NVDA as well-positioned with the push for more excellent Cloud, HPC, and AI workloads.

• Just a week ago U.S. restricted sales of Nvidia's high-performance AI chips for servers, the A100 and H100, to China and Russia, citing national security concerns.

• The U.S. also urged AMD to stop exporting its MI250 chips to China. The chipmakers' share prices and the iShares Semiconductor ETF SOXX came under significant pressure on September 7 following the embargo.

• However, Rakesh saw that the restriction could provide access, focusing on a workaround as a priority over the next few months.

• Price Actions: NVDA shares traded lower by 1.68% at $129.08 on the last check Thursday. AMD shares traded lower by 1.20% at $76.52.

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