Famed investor Jim Cramer says Nvidia Corp (NASDAQ: NVDA) has become a “meme stock” following its warning of a massive hit to earnings last week.
According to the former hedge fund manager, investors should lower their exposure to NVDA as US export restrictions could lead to more pain for the AI chips giant moving forward.
Cramer has long been a proponent of Nvidia stock. However, “you can’t own it like you used to” amidst tariffs and the added export restrictions on semiconductors in 2025, he added.
The aforementioned headwinds have already pushed NVDA shares down more than 30% this year.
What new export restrictions on H20 mean for NVDA
Earlier in April, the Trump administration slapped a new requirement of a license for Nvidia to be able to export its renowned H20 chips to several destinations, including China.
With these new restrictions, the US wants to further curtail Beijing’s access to advanced chips that it’s concerned could be used to build highly sophisticated military systems.
For NVDA, this recent development could mean a significant growth slowdown, given that H20 generated as much as $15 billion in revenue for the chipmaker in 2024.
In fact, the Nasdaq-listed firm has already warned that the new export restrictions could result in up to a $5.5 billion quarterly charge.
Despite emerging challenges and the tariffs-driven rout in the US tech stocks this year, Nvidia stock is still up more than 25% versus its 52-week low at the time of writing.
US wants to maintain its AI supremacy
Note that China’s DeepSeek also used Nvidia’s H20 chips to develop its R1 model that rivals the most powerful AI models but at a fraction of the operational cost.
So, the US government’s new export restrictions are more broadly aimed at maintaining America’s supremacy in artificial intelligence.
Even before taking office on January 20th, President Trump had confirmed plans of committing to making the US the world’s capital for emerging technologies, including crypto and AI.
Amidst such a backdrop, famed investor Jim Cramer has recommended taking a cautious stance on Nvidia shares in the near term.
Wall Street disagrees with Cramer on Nvidia stock
While things have evidently turned more challenging, not everyone on Wall Street agrees with the Mad Money host on NVDA shares.
The consensus rating on Nvidia stock remains at “buy” in April.
Analysts currently have an average price target of about $165 on the AI stock, which translates to a nearly 65% upside from current levels.
They remain bullish on the multinational despite near-term challenges as it continues to be the only game in town for artificial intelligence – a market that Statista forecasts will grow at a compound annualised rate of more than 27% through the end of this decade.
Additionally, NVDA stock pays a dividend yield of 0.039%.
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