Nvidia Could Add Billions From China Sales If H20 GPUs Get Green Light From US: Analyst

BofA Securities analyst Vivek Arya maintained a Buy rating on NVIDIA Corp NVDA with a price target of $220 on Monday.

Arya re-rated Nvidia ahead of its second-quarter earnings call, citing strong sales momentum and long-term earnings potential, while flagging some near-term volatility after the stock’s strong year-to-date run.

The analyst expects second-quarter revenue to come in at $47 billion, beating the $45.8 billion consensus and Nvidia’s own $45 billion guide, driven by a continued ramp in Blackwell GPUs and robust cloud infrastructure spending.

Also Read: Rising Competition In China Threatens Nvidia’s Comeback

For the third quarter, Arya forecasts mid-teens quarter-over-quarter growth to $54 billion, ahead of the $52.5 billion consensus, and sees upside potential to $57–$60 billion if H20 shipments officially resume.

Gross margins are projected to rise to 73%–74% by the third quarter, aided by Nvidia’s rack-scale architecture scaling up, with a potential 200–300 basis point boost if previously written-down H20 inventory (~$5.5 billion in the first quarter) is utilized. Arya also raised its fiscal 2026 or calendar 2025 sales forecast to $210–$215 billion, with projected pro forma EPS of $4.70–$4.80, well above the $4.38 consensus.

Arya attributes the expected beat-and-raise to continued strength in Blackwell and Blackwell Ultra, rising and diversified AI-related capex from hyperscalers like Alphabet’s Google, Meta Platforms, Oracle and xAI, an expanding product pipeline, improving margins, and the potential $5–$10 billion upside from resumed H20 sales in the second half.

Arya did caution that H20 shipments may face regulatory risk due to possible Chinese security probes and may become less competitive as domestic alternatives in China advance. Maintaining U.S. licensing to ship 1-nm or 2-nm chips will also be critical to preserving Nvidia’s lead over rivals such as Advanced Micro Devices.

Robust capex projections from all four major U.S. hyperscalers support Arya’s longer-term optimism. Meta now expects to spend $100 billion in calendar 2026 (up from a prior $79 billion estimate), while Google and Microsoft also forecast increased spending shifts toward faster-depreciating assets like servers. Meta emphasized strong ROI, and Microsoft noted its capex is tied directly to booked contracts.

Based on these trends, Arya sees fiscal 2027 or calendar 2026 earnings power approaching $7 per share, up from the current $5.87 consensus. This assumes the AI total addressable market (TAM) grows from $309 billion to $341 billion, continuing a 60% year-over-year pace. At that level, Nvidia would trade at 25x forward earnings, consistent with its historical mid-20s to mid-30s P/E range.

Looking further, Arya estimates Nvidia could target $10 per share in long-term EPS. He views China as accounting for roughly 10% of the global AI accelerator TAM and highlighted reports that Nvidia recently placed an additional 300,000 H20 GPU orders with Taiwan Semiconductor Manufacturing Co. TSM, on top of its existing orders for 600,000–700,000 units. If approved by U.S. regulators, this could unlock $6–$10 billion in incremental China sales between August and January at ~$10,000 Average Selling Price (ASP). However, up to $3–$4 billion may shift to early next year due to a nine-month supply chain ramp.

Arya also pointed to investor debates around the third-quarter mix between Blackwell Ultra and standard Blackwell (given the latter’s yield challenges), the sustainability of gross margin recovery, and the potential for a tariff-related pull-in in Gaming, mirroring trends seen across consumer-facing semiconductors.

NVDA Price Action: Nvidia stock is trading higher by 2.49% to $178.05 at publication on Monday.

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