Nvidia shares rise after beating sales estimates, flags $8 billion export hit due to US curbs on China

Nvidia beat quarterly sales expectations as customers stockpiled its AI chips before fresh U.S. curbs on China exports took effect, but the same restrictions will slice off $8 billion in sales from the company’s current quarter, forcing the company to offer a forecast below Wall Street estimates on Wednesday.

Shares of the world’s most valuable semiconductor firm still rose 5% in extended trading as investors digested news that the hit in the current fiscal second quarter was not as bad as feared, and Nvidia talked up demand for its new Blackwell chips from customers including Microsoft. The stock is relatively flat so far this year, compared with 2024 when the shares nearly tripled in value. Nvidia now faces trade restrictions on what it can sell, and the AI data center market is also maturing.

Washington’s years-long efforts to thwart Beijing’s access to top-of-the-line U.S. technology have resulted in stricter restrictions on the export of Nvidia’s AI chips - stifling the company’s access to one of the largest markets for semiconductors.

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Midway through a conference call with analysts, CEO Jensen Huang made impassioned remarks about U.S.-China policy, saying that Nvidia was at risk of being cut off from China’s massive AI developer base and arguing that China’s chip industry was sophisticated and closing in on the United States’ dominance. But he praised U.S. President Donald Trump’s recent move to rescind a so-called AI diffusion rule that would have regulated global flows of U.S. AI chips.

But in the shorter term, restrictions on China exports will hurt. Kress said data center revenue in that country declined.

U.S. restrictions on the sale of Nvidia’s H20 chips to China, the only AI processors it could legally export to the country, prompted Nvidia to disclose in April that it expected a $5.5 billion charge, while Huang had in May pegged the revenue impact related to the restrictions at about $15 billion. On Wednesday, Nvidia said the actual first-quarter charge due to the H20 restrictions was $1 billion less than expected because it was able to reuse some materials.

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It said it lost $2.5 billion in H20 sales in the first quarter and expected to miss $8 billion in the second quarter.
However, Nvidia also said the H20 brought in $4.6 billion in sales in the first quarter and that China accounted for 12.5% of overall revenue in the first quarter.