Nvidia shares moved higher in early Monday trading as investors looked to reverse some of last week's $280 million decline amid reports of a new China-focused AI chip and a bullish endorsement from a key Wall Street analyst
Nvidia (NVDA) , which is attempting to work around sanctions put in place last year by the Biden Administration that limit the export of high-end technologies to Beijing, has re-tooled three different chips for the China bound market.
Reuters reported Monday that its also working in a version of its B200 chip, which is part of its new Blackwell series of AI-powering processors, that it can sell to China-based customers without falling foul of U.S. regulations.
The new Blackwell GPU architecture, named after the African American mathematician David Harold Blackwell, performs AI tasks at more than twice the speed of Nvidia's current Hopper chips, while using less energy and providing more bespoke flexibility, the tech group has said.
China accounted for around $10.4 billion in overall revenues for Nvidia last year, but that tally was sharply lower than in previous years owing to the tightened tech export restrictions.
"Our data center revenue in China is down significantly from the level prior to the imposition of the new export control restrictions in October," finance chief Colette Kress told investors in late May. "We expect the market in China to remain very competitive going forward."
The importance of AI has caught the attention of every nation," she added. "We ramped new products designed specifically for China that don't require export control license."
Citi analyst Atif Malik, meanwhile, put Nvidia on what the bank calls a "positive catalyst watch" for the next thirty days heading into this weekend's 'Siggraph' conference, an annual event focused on computer graphics and interactive technologies.
'Wildly' bullish on semis
'We remain wildly bullish on semis", Citi analysts noted in a separate report. "We spent the last week meeting investors in New York/Connecticut. Nvidia remains the stock with the most positive sentiment, with Broadcom catching up."
Malik, who reiterated his 'buy' rating and $150.00 price target for Nvidia, said CEO Jensen Huang and Meta Platforms (META) CEO Mark Zuckerberg are likely to make discuss the future of AI technologies and expects potential insights into how Nvidia clients will monetize their billions in capital spending, "a key topic on investors' minds these days".
Related: Analyst resets Nvidia stock price target in chip-sector overhaul
Hyperscalers such as Meta, Amazon (AMZN) , Google (GOOGL) and Microsoft (MSFT) are poised to spend around $92 billion this year alone building out their massive computing infrastructure.
The investment reflects their clients' move to leverage their massive datasets to enhance sales of everything from drive-through dining to the most complicated pharmaceutical testing.
"We expect to hear accelerating AI demand trend at the conference with no signs of an air pocket and view the recent pullback in the stock on geopolitical concerns as a buying opportunity," Malik and his team wrote.
Blackwell 'air pocket' concerns
Analysts had worried that a gap between the current H100 chips and the new Blackwell offering would create an 'air pocket' in revenue as customers canceled orders for the older chips and waited for the newer system.
Nvidia shares were marked 2.06% higher in premarket trading to indicate a Monday opening bell price of $120.36 each.
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Nvidia is slated to publish its fiscal second quarter earnings on August 28, with investors looking for a bottom line of 64 cents per share on revenues of $28.47 billion.
Related: Analyst revisits Nvidia stock price target after Blackwell checks
Nvidia told investors in May that second quarter revenue would rise to around $28 billion, with a 2% margin for error, even as it said the Blackwell system of processors and software wouldn't start shipping until the second half of 2024.
"We view the setup for Nvidia positively ahead of the July quarter earnings and the October quarter guidance," said Piper Sandler analyst Harsh Kumar, who lifted his price target on the group by $20, to $140 per share, in a note published Monday.
"Demand is expected to outpace supply once the B100/B200 launches," he added. "In our bull scenario, Nvidia is positioned for a $2 billion-plus beat for July quarter revenue, aided by a bounce in networking supply."
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