Nvidia earnings live: Nvidia beats on Q1 revenue, sees $8 billion impact from China export rules

Nvidia reported mixed Q1 results, with revenue of $44.1 billion beating estimates but data center revenue slightly missing at $39.1 billion; the company expects an $8 billion revenue hit in Q2 due to China export rules, contributing to over $10 billion in lost revenue in the first half of the fiscal year. Despite these headwinds, Nvidia's stock rose over 4% in after-hours trading, driven by strong demand from hyperscalers and overall AI infrastructure investments, with analysts highlighting the company's continued dominance in the AI chip market.

Analysis

Nvidia reported mixed first-quarter results, with total revenue of $44.1 billion surpassing analyst estimates of $43.3 billion, representing a 69% year-over-year increase, though this growth rate marks a moderation from the 262% reported a year prior. Adjusted earnings per share came in at $0.96, beating forecasts of $0.93 and exceeding last year's $0.61. However, Data Center revenue, a key segment, slightly missed expectations at $39.1 billion versus an estimated $39.2 billion, despite substantial growth from $22.5 billion in the same period last year. A significant headwind is the U.S. export ban on advanced chips to China, with Nvidia forecasting an $8 billion revenue impact in the second quarter, adding to a $2.5 billion hit in Q1, totaling an anticipated $10.5 billion loss in H1 FY26. CEO Jensen Huang stated the "$50 billion China market is effectively closed to US industry," and the company took a $4.5 billion inventory write-down due to these rules. Despite these challenges, Nvidia's stock rose over 4% in after-hours trading, buoyed by continued strong demand from hyperscalers like Microsoft, Amazon, and Meta, with Microsoft reportedly deploying tens of thousands of Nvidia's new Blackwell GPUs. Analysts, such as Wedbush's Dan Ives, viewed the quarter as "very robust" considering the China headwinds, highlighting Nvidia's ongoing dominance in the AI chip market and potential growth from new Middle East deals. The company is also investing in U.S.-based manufacturing, partnering with Foxconn and Wistron, aiming to build AI supercomputers domestically. While exploring options for China, Huang admitted, "we don't have anything at the moment" to replace the banned Hopper chips.

Key Decisions for Investors

• Investors should weigh Nvidia's continued strong demand from hyperscalers and technological leadership, evidenced by the Blackwell GPU advancements, against the significant and ongoing revenue impact from China export restrictions which the company expects to materially affect its business.
• Monitor closely any developments regarding Nvidia's strategies to mitigate the China sales ban, including potential new compliant products, as well as the sustainability of robust capital expenditure from major cloud service providers.
• Consider the stock's valuation in the context of a 'crowded trade' and moderating, albeit still strong, revenue growth, alongside the geopolitical risks associated with U.S.-China trade relations.
• Evaluate the long-term implications of Nvidia's domestic manufacturing initiatives and diversification efforts, such as Middle East deals, as potential offsets to the challenges in the Chinese market.