Nvidia (NASDAQ: NVDA) may post strong July-quarter earnings, but could guide below Wall Street expectations for the October quarter due to ongoing uncertainty around China, according to a note from KeyBanc Capital Markets.
KeyBanc said it expects Nvidia’s outlook to exclude direct revenue from China because of pending license approvals and uncertainty on timing. The brokerage added that if China sales were included, they could add an extra $2–3 billion in revenue, driven by demand for the H20 and RTX6000D (B40) chips.
Despite the U.S. easing certain AI chip restrictions, analysts believe Nvidia will take a cautious stance. KeyBanc noted: “Consistent with AMD’s results, we expect Nvidia’s third-quarter guidance to exclude direct contributions from China.”
The report also cited possible 15% tariffs on AI exports and pressure from the Chinese government for local AI providers to use domestic chips as additional headwinds.
Even with these challenges, KeyBanc pointed to strong growth drivers. GPU supply increased 40% in Q2 and is projected to rise another 20% in Q3 with the launch of Nvidia’s Blackwell B200. Meanwhile, the newer Blackwell Ultra B300 is expected to start shipping in the October quarter, potentially making up half of all Blackwell shipments.
Rack production is also improving. KeyBanc estimates GB200 rack yields at major server manufacturers are nearing 85%, setting the stage for 15K–17K racks shipped by Q4 and around 30K for the year, up from the earlier estimate of 25K.
Reaffirming its Overweight rating, KeyBanc raised its Nvidia price target to $215 from $190. Nvidia is set to release its earnings report on August 27.
