Nvidia H20 restrictions ‘more abrupt’ than Morgan Stanley expected

After Nvidia (NVDA) filed an 8K to disclose that the U.S. government has enacted new licensing requirements for shipments of the H20 product, “and any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or combination thereof,” to China or companies headquartered in China and said it will see up to $5.5B in inventory charges in the April quarter, Morgan Stanley analyst Joseph Moore noted that this is not a ban, it is a licensing requirement, but argues that the inventory writedown suggests that the company is “not optimistic about being granted licenses.” The firm expected H20 to be restricted by export controls, but stopped shipments “effective immediately” is a bit more abrupt and disruptive than expected and the large inventory writedown is “a cautionary signal,” the analyst added. While the firm is trimming estimates for the next couple of quarters to remain conservative, it says Nvidia remains its top pick in semis with an Overweight rating and $162 price target on the shares.