Nvidia's (NVDA) fiscal Q1 gross margin is expected to fall to around 58% due to a $5.5 billion inventory write-off linked to the US ban on the sale of H20 chips to China, BofA Securities said in an earnings preview emailed Friday.
The company is also seen to issue a fiscal Q2 sales outlook of $41 billion, below current lowered consensus of $46 billion, due to the ban, according to the preview.
The firm said it expects fiscal year 2026 earnings per share of between $3.90 and $4 based on a projected $15 billion reduction in sales due to the H20 ban.
BofA said near-term appreciation in Nvidia's stock will be driven by a "positive catalyst," such as calendar year 2026 visibility, gross margin recovery and new China product.
The firm maintained its buy rating with a $160 price objective.
Shares of Nvidia were down 1.6% in recent trading Friday.
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