On Monday, Bernstein analysts maintained a positive stance on NVIDIA (NASDAQ:NVDA) shares, reiterating an Outperform rating and a $175.00 price target. The firm addressed the potential impacts of new U.S. export controls, suggesting that NVIDIA's H20 shipments to China are likely to remain unaffected. Bernstein's analysis indicates that the H20's performance level is low enough to exempt it from the latest restrictions, which target components previously impacted by prior controls.
The analysts also touched upon the situation with Broadcom Inc.'s (NASDAQ:AVGO) AI ASICs developed for Bytedance, noting uncertainty regarding their performance level and shipping destinations. According to InvestingPro data, Broadcom has demonstrated robust performance with revenue reaching $51.57B, showing impressive 44% growth.
The company appears overvalued based on InvestingPro's Fair Value analysis, though 20 analysts have recently revised their earnings estimates upward. Despite this, they believe that Bytedance's revenues are not materially significant at this stage.
Assessing the overall impact of the new controls on NVIDIA is complex; however, Bernstein suggests that the situation appears manageable. They expect that most of NVIDIA's large customers will probably be in favored areas and that sovereign entities should be able to build out significant computing clusters, provided they obtain Non-Volatile Encryption Unwind (NVEU) status.
The firm also acknowledged the disruptive nature of the new controls, particularly for countries not on the favored list but who are allies. With the transition to the incoming Trump administration, Bernstein speculates about the possibility of policy changes but currently lacks insight into future actions. They highlighted that the timing of the controls' introduction, just a week before the inauguration, could be seen as contentious.
Bernstein concluded by stating that, given the current information, they will not be making any changes to their ratings or estimates for NVIDIA at this time. They plan to conduct further analysis of the new rules to evaluate any potential long-term effects on the company's business and performance. For deeper insights into both companies' valuations and performance metrics, InvestingPro subscribers can access comprehensive Pro Research Reports, available for over 1,400 US stocks, featuring detailed analysis and actionable intelligence.
In other recent news, Broadcom Limited has reported significant developments in its financial performance and growth prospects. The company recently issued $3 billion in senior notes to bolster its financial structure. In terms of earnings, Broadcom reported fiscal fourth-quarter 2024 revenues of $14.1 billion and earnings per share of $1.42. For the first quarter of fiscal year 2025, the company anticipates revenues of $14.6 billion and an EBITDA margin of approximately 66%.
Analyst firms such as UBS, Bernstein SocGen Group, and Citi have expressed optimism about Broadcom's prospects. UBS has increased the price target for Broadcom shares, citing an optimistic outlook on the company's AI revenue streams. Bernstein SocGen Group maintained an Outperform rating on Broadcom, highlighting the company's potential AI revenue opportunity ranging from $60 billion to $90 billion by 2027. Citi analysts reiterated their Buy rating on Broadcom, underscoring their confidence in the strength of the AI business.
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