Nvidia’s NASDAQ:NVDA) growth prospects may face some near-term limitations due to mounting challenges linked to export restrictions on AI chips to China and manufacturing issues with its cutting-edge GB200 systems, according to a recent report from KeyBanc Capital Markets.
“We expect NVDA to report more modest upside to F1Q (April) results and F2Q (July) guidance given headwinds associated with the AI China chip ban and continued supply constraints associated with GB200 NVL72,” KeyBanc analysts wrote.
To help soften the blow, Nvidia is reportedly working on a new graphics processing unit (GPU) that adheres to current export rules. KeyBanc noted this GPU will forego the high-bandwidth memory (HBM) component and instead use GDDR7, aligning it with regulatory standards for Chinese markets.
“We do believe this will be partially offset by a new China-compliant AI GPU that NVDA is developing that is non-HBM based (uses GDDR7 instead),” KeyBanc said.
The chip, derived from Nvidia’s RTX6000 workstation architecture, could see shipment volumes of up to 1 million units at an average price of $8,000 – potentially generating around $8 billion in revenue. This would partially offset the estimated $14 billion revenue loss tied to the halted shipments of the previously planned H20 GPU units.
Still, manufacturing remains a sticking point. KeyBanc highlighted that Nvidia’s production partners, or original design manufacturers (ODMs), continue to face difficulties ramping up output of the GB200 NVL72 racks. Shipments in the first quarter reportedly came in below 1,000 units, while second-quarter estimates hover between 3,000 and 4,000 – well under initial projections.
Looking further out, Nvidia’s supply chain is aiming to produce 30,000 GB200/GB300 racks for fiscal year 2026, but KeyBanc expressed growing doubts about the feasibility of meeting that target amid persistent production bottlenecks.
As a result of these headwinds, the firm modestly raised its revenue estimate for the current quarter to $44.2 billion, while lowering projections for the second quarter as well as revising down its full-year forecasts for 2026 and 2027.
While Nvidia continues to dominate the AI hardware space, KeyBanc’s report underscores the complexities of scaling production under geopolitical and logistical constraints that could temper investor expectations in the short term.