Nvidia Corp (NASDAQ:NVDA, ETR:NVD) is facing near-term headwinds from the US export ban on its H20 GPUs, prompting UBS analysts to trim their price target on the chipmaker to $175 from $180 ahead of its fiscal first quarter 2026 earnings report.
Shares of Nvidia traded up 5.2% at about $122 on Monday amid a broader market rally as the US and China agreed to temporarily lower tariffs.
The analysts now expect revenue for the three months ending April 27, 2025, of approximately $44 billion, roughly $1 billion above Nvidia’s guidance of $43 billion, despite an estimated $800 million revenue hit from the H20 ban.
They also forecast earnings per share (EPS) of $0.76, well below the Street’s $0.89, due largely to lower gross margins, approximately 58.5%, as Nvidia absorbs the impact of the H20 ban in its non-GAAP results.
“We are trimming near-term estimates because we fear that we initially underestimated the impact from the H20 ban, but even so, we still feel that Nvidia can report Q1 revenue slightly ahead of its $43 billion guidance and still see revenue growing, albeit only slightly, in Q2,” they wrote.
“This should be enough to satisfy current investors bogeys because about half of all investors we spoke with believe revenue will be guided down and the other half expect revenue to be guided about flat.”
Second quarter outlook
While Q2 is likely to be muted by supply chain bottlenecks and export restrictions, UBS sees signs of strong underlying demand.
“Q2 is a bit of an odd quarter,” they write, but highlighted that “GB300 racks start to ramp in late Q3 and Nvidia is potentially allowed to reship a modified Blackwell-based SKU into China.”
They expect Blackwell-related revenue to rise by approximately $9 billion sequentially in Q2, helping offset lower unit volumes and slower GB200 rack shipments.
The UBS analysts remain bullish long term, expecting quarter-over-quarter growth to reaccelerate in the second half of the year.
However, they acknowledged a slightly tempered outlook for gross margin expansion in the second half due to Nvidia sticking with its lower-margin Bianca compute board design.
“We do expect a confident overall tone on the call, but the company could slightly temper 2H gross margin commentary,” they wrote.
UBS also flags potential regulatory tailwinds, with recent reports suggesting the AI Diffusion Rule could be replaced with a direct licensing structure, which would be “a big win for Nvidia,” provided there are no volume caps.
Nvidia will report its financial results for Q1 after US markets close on May 28.