Nvidia has surpassed Wall Street expectations for its first fiscal quarter, largely due to accelerated orders from Chinese firms ahead of new U.S. export bans.
However, the company cautioned that these same restrictions will reduce projected second-quarter revenue by $8 billion, resulting in guidance that came in below analysts’ forecasts.
Shares climbed 5% after the announcement, driven by better-than-expected first-quarter results and continued optimism around Nvidia’s new Blackwell chips, especially among major tech firms like Microsoft.
While the company’s stock remains mostly unchanged in 2025, this contrasts with the significant surge it experienced in 2024. Nvidia now contends with tighter export rules and a maturing AI infrastructure market.
During an earnings call, CEO Jensen Huang voiced concern over growing U.S.-China tensions. He highlighted how Nvidia risks losing access to China’s substantial AI ecosystem. “President Trump wants America to win.
And he also realizes that we’re not the only country in the race,” Huang stated, applauding Trump’s decision to scrap a rule that would have regulated international AI chip distribution.
Huang confirmed that the company can no longer customize its Hopper chips for China but declined to provide details on whether Blackwell variants would follow suit. Reports suggest that Nvidia is working on a China-compatible version of Blackwell.
Related story: Nvidia Unveils Cost-Effective AI Chip for China Amid U.S. Export Restrictions
Middle East Expansion Offers Glimmers of Hope
While restrictions are expected to impact short-term revenue, Nvidia has recently secured agreements in the Middle East, including a large-scale data center project in the UAE and additional developments in Saudi Arabia and Taiwan.
These ventures may provide long-term revenue opportunities.
CFO Colette Kress emphasized future prospects, noting “projects requiring tens of gigawatts of Nvidia AI infrastructure in the not-too-distant future.” Nevertheless, she confirmed a decline in China-based data center income.
The export limits on Nvidia’s H20 chips—its only legal option for Chinese buyers—have already triggered a $5.5 billion charge disclosed in April. The actual Q1 impact was about $1 billion lower due to material reuse.
Despite losing $2.5 billion in H20 sales in Q1, the chip still generated $4.6 billion in revenue, accounting for 12.5% of total sales.
According to D.A. Davidson’s Gil Luria, early bulk purchasing by Chinese firms helped lift first-quarter numbers. However, concern lingers over future demand due to geopolitical uncertainty and possible trade tariffs.
Nvidia reported adjusted Q1 earnings of 81 cents per share—or 96 cents excluding charges—slightly ahead of analyst estimates. It forecasts $45 billion in Q2 revenue, slightly under the $45.9 billion analysts had anticipated.
Analyst Jacob Bourne summarized the situation: “This doesn’t signal an end to Nvidia’s dominance, but highlights that sustaining it will require navigating an increasingly complex landscape of geopolitical, competitive, and economic challenges.”
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