While the export restrictions on Nvidia Corp.‘s NVDA H20 AI chip have dented its earnings estimates for the first quarter, the recently signed contracts in the Middle East could surprise the second quarter guidance on the upside.
What Happened: According to T3 Live, Nvidia’s earnings estimates fell for the first time in years after the company took a $5.5 billion hit because of export restrictions on the H20 AI chip.
However, President Donald Trump‘s dealmaking rampage in the Middle East during the Saudi-U.S. Investment Forum, with a major emphasis on AI, could bring a positive change to its second-quarter estimates.
These deals include the sale of 18,000 Blackwell chips to Saudi Arabia’s Humain. Additionally, the U.S. is partnering with the United Arab Emirates to build a major AI campus, and Nvidia is joining the party.
Also, Oracle Corp. ORCL will spend $40 billion on Nvidia chips for OpenAI’s new Texas-based data center.
“So could NVIDIA deliver monster guidance on its Wednesday earnings report It seems possible,” the post stated further.
However, according to Bank of America analyst Vivek Arya, Nvidia’s gross margins could drop due to a $5.5 billion inventory write-off from U.S. restrictions on high-end H20 chip sales to China.
This could slash gross margins from 71% to 58%, pushing pro forma EPS down to $0.74, 16% below consensus. He highlights that Nvidia is itself estimating a $15 billion reduction in FY26 sales due to the H20 ban, significantly higher than analyst expectations.
Despite these risks, Bank of America maintains a “Buy” rating on Nvidia with a $160 price target, suggesting a 22% upside.
See Also: Unprecedented Demand For Nvidia’s GB200 Drives Accelerated Production: ‘Taiwan Engineers Are Working Incredibly Hard,’ Says Expert
Why It Matters: According to the technical analysis of its simple daily moving averages, Nvidia’s closing price of $131.29 apiece as of Friday was above its 20-, 50-, and 200-day moving averages.
The relative strength index at 63 was still neutral but approaching the overbought mark of 70. Whereas, its momentum indicator, the MACD line, was positive as its 12-day exponential moving average was above its 26-day EMA, indicating a bullish trend.
According to Benzinga Pro, analysts expect earnings per share of $0.88 for the first quarter, a 43% increase from the prior year, while its revenue is projected at $43.4 billion, up 65% from a year ago.
Price Action: Nvidia’s shares closed 1.16% lower on Friday. The stock was down 5.08% on a year-to-date basis, and 15.27% higher over a year. In pre-market on Tuesday, the stock was up 2.7%
Benzinga Edge Stock Rankings shows that Nvidia had a stronger price trend over the short, medium, and long term. Its momentum ranking was solid, however, its value ranking was poor at the 6.61th percentile. The details of other metrics are available here.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose in premarket on Tuesday. The SPY was up 1.54% to $588.00, while the QQQ advanced 1.71% to $517.93, according to Benzinga Pro data.
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