Nvidia Earnings Bring Focus to China. What It Means for the Stock.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Nvidia stock gained on Monday in the run-up to its earnings report this week, despite doubts about sales of its artificial-intelligence chips in China.

The semiconductor maker’s shares were up 0.7% at $179.22. The stock rose 1.7% on Friday, swept up in a broad market rally.

Nvidia reports earnings on Wednesday after the market close.

The major uncertainty is whether Nvidia will be able to sell its chips in China. Nvidia has told some partners to stop work related to production of its H20 processor after the Chinese government told domestic companies not to buy the hardware, The Wall Street Journal reported, citing people familiar with the matter.

Nvidia is hoping for U.S. approval to sell a more advanced AI chip than the H20 in China, the Journal reported. Nvidia hasn’t directly commented on reports of halted H20 production but previously told Barron’s it constantly manages its supply chain to address market conditions.

Still, Wall Street analysts are certain that Nvidia can deliver impressive results regardless. Stifel analyst Ruben Roy raised his target price on the stock to $212 from $202 and reiterated a Buy rating.

“We expect a beat/raise scenario with H20 shipments resumed in July, coupled with accelerating broad-based demand for GB300 infrastructure,” wrote Roy in a research note on Sunday**.**

Other analysts also expect Nvidia will eventually be able to resume sales to China.

“We expect another beat-and-raise quarter powered by volume deployments of Blackwell GPUs and NVL72 racks,” wrote William Blair analyst Sebastien Naji in a research note.

“The second quarter is likely to have zero China revenue contributions, despite the reversed export controls—guidance for the second half of the year will benefit from the re-inclusion of H20 revenue.”

Naji has an Outperform rating, with a fair value of about $205 based on a price-to-earnings ratio of 35 times his forecast for the company’s adjusted earnings in fiscal 2027.

Two Nvidia peers were down. Advanced Micro Devices and Broadcom were off 1.9% and 0.6%, respectively.

Write to Adam Clark at adam.clark@barrons.com