Investing.com -- UBS has lowered its price targets for both Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD), citing the negative impact of newly issued U.S. licensing requirements on China-focused AI chips.
Nvidia’s price target was cut to $180 from $185. UBS said the newly implemented restrictions on the H20 GPU will weigh on both revenue and gross margin.
“We estimate ~$700MM of this will come out of FQ1 (April) with the remaining ~$8B spread across FQ2/FQ3,” analysts led by Timothy Arcuri said, referring to the total ~$9 billion revenue impact tied to the $5.5 billion in reserves.
They now expect fiscal Q1 non-GAAP gross margin to fall to 58–59%, down sharply from a prior estimate of 71%.
The team also cited added gross margin pressure from Nvidia’s decision to delay architectural upgrades.
“Part of the gross margin pressure is due to higher tariff-related costs but more importantly due to NVDA’s recent decision to stick with the Bianca design and push out some design changes to a new architecture (Cordelia) because it is experiencing warpage issues,” analysts continued.
They think that Cordelia is now intended for Rubin instead of GB300.
On AMD, UBS lowered its price target to $155 from $175, stressing that the licensing impact may be even more significant than for Nvidia.
“AMD announced that its MI308 products (China-specific GPUs) are now subject to similar license requirements to the H20 (which we believe also carry a presumption of denial - effectively a ban),” the note states.
The chipmaker expects to take charges of up to $800 million in inventory, purchase commitments and related reserves. Based on UBS assumptions, this translates to a revenue impact of around $1 billion.
The analysts reduced AMD’s FQ2 data center GPU forecast from $1.8 billion to $1.4 billion and cut full-year 2025 revenue and EPS estimates to $29.8 billion and $3.61, respectively, from $30.9 billion and $4.46.
Calendar 2026 revenue and EPS projections were also trimmed to $36.6 billion and $5.44.
UBS remains constructive on AMD’s MI400X outlook if it can launch in the first half of 2026, ahead of Nvidia’s Rubin platform in the second half.