As a result, the chipmaker booked a $4.5 billion charge for the fiscal first quarter, ended April 27, and added that it would have recorded an additional $2.5 billion in revenue without the restriction.
“The H20 export ban ended our Hopper data-center business in China,” Huang said.
Nvidia wasn’t the only company caught in the geopolitical crossfire. Hours before its earnings report, shares of chip-design firms Cadence (CDNS) and Synopsys (SNPS) slid after the Financial Times reported that the Trump administration had told them to stop selling software to customers in China.
Nvidia is the top supplier of graphics-processing units, which are essential to power and train large AI models worldwide.
China remains a key market for Nvidia, accounting for 13% of its sales in the past financial year. To adapt to the new rules, the company plans to launch a cheaper AI chip for the Chinese market, with production set to begin as early as September, according to Reuters.
Year to date, Nvidia stock is up 3.65% while the S&P 500 Index is up 0.52%.Image source: Chih/Bloomberg via Getty Images
Policy tensions grow, but Nvidia keeps climbing
While Huang has long warned that export controls could hurt U.S. chipmakers, some experts argue that policymakers could hardly reverse course as broader national-security interests justify the tradeoffs.
“U.S. semiconductor policy isn’t about one firm’s earnings or market access — it’s about protecting America’s strategic edge in a high-stakes geopolitical contest,” Dewardric McNeal, managing director at Longview Global, wrote on CNBC.
“Sometimes that means stepping back from markets that were never going to remain open anyway,” he added.
Even so, Nvidia stock (NVDA) performed well. The stock rose 3.25% to close at $139.19 on May 29 — a sharp contrast to the previous quarter, when it plunged 8.48% after the company reported earnings.
Back in 2022, Huang cautioned that U.S. export controls could significantly harm Nvidia by restricting its ability to sell advanced chips to China.
Since then, Nvidia’s stock has increased roughly tenfold, and data-center revenue has grown at a remarkable pace, driven by demand across the U.S., Europe, and the Gulf States. In fiscal 2024, revenue for the data-center segment tripled (up 217%) year over year.
That growth trend continued this quarter. On May 28, Nvidia reported adjusted earnings of 96 cents per share on $44.06 billion in revenue for its fiscal first quarter, beating Wall Street’s expectations of 93 cents and $43.31 billion.
The company forecasts $45 billion, plus or minus 2%, of revenue for the July quarter, while analysts had projected $45.9 billion. But it noted that the figure would have been roughly $8 billion higher without the China export curbs.
Gross margin came in at 61%, but would have been 71.3% without the H20-related inventory charge.
Despite rising tensions between Washington and Beijing, Nvidia’s core business remains in expansion mode. “Global demand for Nvidia’s AI infrastructure is incredibly strong,” Huang said in a statement.
"Countries around the world are recognizing AI as essential infrastructure — just like electricity and the internet — and Nvidia stands at the center of this profound transformation,” he added.
Since April 4, when the stock hit a recent bottom price of $94.31, it has surged by more than 47%.
Bank of America raises Nvidia stock price target after earnings
Bank of America has lifted its price target for Nvidia stock to $180 from $160 and reiterated a buy rating, according to a research report following the earnings.
The analysts saw three positive upsides from the company's earnings call: Blackwell racks in full production, China derisked, and gross margin likely to go back to mid-70s percent by year-end.
The investment firm increased its pro-forma EPS estimates by 6% for fiscal 2026, 2% for 2027, and 12% for 2028, bringing the projections to $4.21, $5.87, and $7.23, respectively. Nvidia remains the firm's Top Pick stock.
Still, Bank of America highlights risks such as potential delays and supply-chain issues from a faster, annual product cycle, along with geopolitical threats to AI products.
"NVDA's plan to launch cutting-edge products every year (October) is admirable but increases execution risks, similar to the [about two-quarter] delay we saw in Blackwell rack execution," the analysts wrote.
"Last, we can't ignore headline or real risks from use of (or restriction on) AI products as a bargaining tool in global trade deals," the analysts added.
Year to date, Nvidia stock is up 3.65% while the S&P 500 Index is up 0.52%.
