Nvidia (NVDA) remains "best positioned" in artificial intelligence despite the loss of H20 chip sales to China following US government restrictions, Oppenheimer said in a Thursday note.

The firm said it sees upside to the company's fiscal Q1 results due next week and expects the company to issue fiscal Q2 outlook in line with analyst expectations.

Oppenheimer expects the chipmaker to report fiscal Q1 adjusted earnings of $0.92 per share, up from its previous forecast of $0.91.

Segment wise, the firm said it expects the data center business to record a 71% increase in revenue year-over-year thanks to "robust demand" for the company's GB200 AI systems. Oppenheimer said production of the flagship rack-scale systems appears to have moved past initial growing pains.

The firm said it also sees sovereign AI as a growing portion of Nvidia's revenue, with China representing a total addressable market of $50 billion. The firm expects a potential China-compliant SKU from Nvidia in July.

Nvidia CEO Jensen Huang previously called US export restrictions on AI chips to China a "failure," saying the measures have prompted Chinese firms to shift purchases to domestic chipmakers, including Huawei.

Still, as recently as Wednesday, the White House said it would maintain its efforts to prevent advanced AI technology from reaching China, rebuffing Huang's call for relief.

China currently represents less than 5% of Nvidia's sales, Oppenheimer said.

The firm reiterated an outperform rating on the stock and $175 price target.

Shares were up 1.7% in recent trading.

Price: 133.70, Change: +1.89, Percent Change: +1.44