Nvidia Faces Limited Near-Term Upside Amid China AI Chip Ban and Production Challenges, Says KeyBanc

Nvidia (NASDAQ: NVDA) may see only moderate gains in its upcoming earnings report, according to a new outlook from KeyBanc Capital Markets. The firm cited ongoing obstacles related to the U.S. ban on AI chip exports to China and persistent supply chain limitations affecting Nvidia’s high-performance GB200 NVL72 systems.

In its latest note, KeyBanc analysts forecast more restrained upside in Nvidia’s fiscal first-quarter (April) results and its guidance for the second quarter (July). The subdued expectations stem from the combined pressures of export restrictions and production capacity concerns.

"We anticipate Nvidia will report more modest gains due to the AI chip ban impacting Chinese sales, along with limited availability of its GB200 systems," the note stated.

Nvidia Plans Workaround with New AI GPU for Export

Despite regulatory headwinds, Nvidia is preparing a strategic response. The company is reportedly developing a new AI GPU tailored to comply with U.S. export rules. This alternative chip—based on the RTX6000 workstation GPU—is expected to serve as a stopgap for restricted markets.

According to KeyBanc, Nvidia could ship approximately one million units of the compliant GPU, with an estimated average selling price of $8,000, potentially generating around $8 billion in revenue. This move could partially compensate for the estimated $14 billion loss tied to the banned H20 AI chips.

Supply Chain Concerns Cloud FY26 GPU Rack Targets

While demand for Nvidia’s advanced AI infrastructure remains high, the company’s ability to scale production continues to be a sticking point. KeyBanc flagged growing concern over whether Nvidia can meet its goal of manufacturing 30,000 GB200/GB300 rack units by fiscal 2026.

"Production challenges are ongoing, and we are increasingly doubtful that Nvidia can meet its ambitious rack deployment targets," the analysts warned.

Revenue Estimates Adjusted Amid Ongoing Headwinds

KeyBanc has slightly increased its revenue projection for Nvidia’s fiscal Q1 to $44.2 billion, reflecting resilient demand. However, the firm has lowered expectations for Q2 and cut full-year forecasts for 2026 and 2027, citing ongoing export limitations and production delays.

(Sources: investing.com, reuters.com, ChatGPT)