Nvidia's (NVDA) disclosure late Tuesday related to exporting its H20 GPU to China shows that the company faces "massive" curbs in selling its chips to the Asian country, Wedbush Securities said in a Wednesday note.
The company said in the disclosure that it expects a $5.5 billion charge in fiscal Q1 linked to the product line after the US government mandated it to secure an export license for China, among others.
Wedbush said the US essentially preventing Nvidia from selling the chips to China is just the start of a "long and drawn out process" between the world's two largest economies with the effectivity of 145% reciprocal tariffs.
The analysts said they believe "the Nvidia poker move puts pressure on Beijing," as Chinese authorities are aware that "there is one chip in the world fueling the [artificial intelligence] revolution and that is Nvidia."
Wedbush analysts also said that while news of the US restrictions imposed on the chipmaker "is concerning," it is not seen as a "shock" since the two countries are in the middle of a trade war and expectations are for the two sides to engage in "negotiations in some form" over the coming weeks or months.
Nvidia shares were down more than 5% in early Wednesday trading.
Price: 106.14, Change: -6.07, Percent Change: -5.41
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