Nvidia will jump another 20% after report of China export license agreement, Wells Fargo says

Wells Fargo raised its price target on Nvidia (NVDA) to $220 from $185, reiterating an Overweight rating and implying 20.4% upside, ahead of the company's August 27 earnings. This upgrade is largely driven by a reported agreement allowing Nvidia and AMD to resume sales of specific chips (e.g., Nvidia's H20) in China, in exchange for a 15% revenue share. Analysts now project Nvidia could recapture the estimated $8 billion quarterly revenue impact from China by F4Q26, with potential for further growth, supported by strong macro data and hyperscale capex trends, reinforcing the stock's significant outperformance (56% gain in three months).

Analysis

Wells Fargo has increased its price target for Nvidia (NVDA) to $220 from $185, reiterating an overweight rating and projecting a 20.4% potential upside based on significant new catalysts. The primary driver for this upgrade is a reported agreement allowing Nvidia to resume sales of its H20 chips in China in exchange for a 15% revenue share to the federal government. This development is forecast to enable Nvidia to fully recapture the estimated $8 billion per quarter in revenue that was jeopardized by the export ban, with analysts expecting this recovery to be complete by the fourth fiscal quarter of 2026. This outlook is further supported by strong macroeconomic indicators, including robust U.S. and Taiwanese exports of automated data processing machines and strong hyperscale capex trends. Despite the stock's significant outperformance, with a 56% gain in the last three months, sentiment remains highly positive heading into the August 27 earnings report, suggesting market participants anticipate continued fundamental strength.

Key Decisions for Investors

• The reported China export agreement materially de-risks a major revenue headwind for Nvidia, and investors may consider this a catalyst to re-evaluate or increase exposure, given the potential to recapture $8 billion in quarterly sales.
• Monitor the upcoming August 27 earnings for management's official confirmation of the China deal, details on the expected margin impact of the 15% revenue share, and updated guidance reflecting this new variable.
• Given the stock's 56% rally in three months and what analysts describe as 'increasing upside bogey sentiment', be mindful that high expectations are already priced in, which could create volatility around the earnings release regardless of the outcome.
• Consider the precedent this revenue-sharing agreement sets for other U.S. semiconductor firms like AMD, as it may become a new model for navigating geopolitical trade restrictions in the technology sector.