Jensen Huang, co-founder and CEO of Nvidia Corp., speaks throughout a information convention in Taipei on Might 21, 2025.
I-hwa Cheng | Afp | Getty Photos
Nvidia continues to see large progress from gross sales of graphics processors, with demand for synthetic intelligence infrastructure exhibiting no indicators of cooling.
However for the AI chipmaker, the temper is completely different heading into Wednesday’s earnings report than it has been in current quarters. There’s one huge purpose why: China.
On April 9, the Trump administration despatched Nvidia a letter, and mentioned it was requiring an export license for the corporate’s H20 chip, a model of its Hopper processor specifically designed for the Chinese language market to adjust to earlier U.S. restrictions.
Relationship again to President Joe Biden’s time period, the U.S. authorities has been involved that AI chips from Nvidia and different semiconductor corporations like Advanced Micro Devices can be utilized to create supercomputers for adversaries’ navy functions.
Following the brand new restrictions, Nvidia mentioned it might take a $5.5 billion write-down on stock. Analysts known as it the largest write-down within the historical past of the chip business. The potential impression on future income is hefty.
“This stock write-off implies a $15 billion H20 income hit on a rolling 12-month foundation,” wrote David O’Connor, an analyst at BNP Paribas, in a report Tuesday.
For the quarter led to April, analysts count on Nvidia to publish 66% income progress to $43.28 billion, based on LSEG. Whereas that stage of progress is way increased than the sort of growth at any of Nvidia’s megacap friends, it marks a pointy deceleration from a 12 months in the past, when the corporate recorded progress of greater than 250%.
Due to the brand new export license necessities, there’s a whole lot of uncertainty surrounding projections for the remainder of the 12 months. The typical analyst estimate is predicting progress within the present quarter of 53%, with comparable a quantity anticipated for the complete fiscal 12 months, which ends in January.
Morgan Stanley analysts wrote in a report Tuesday that Nvidia faces a much bigger hit than anticipated.
“Whereas our pondering on the time was that this was not less than partly anticipated by the administration crew, it turned clear after the ban that the corporate had been getting indications that H20 can be OK, and that they had been materially stunned,” the analysts wrote.
Nvidia shares have bounced again of late after a tough begin to the 12 months and at the moment are up about 1% in 2025, whereas the Nasdaq is down about 1%.
Earlier this month, Nvidia CEO Jensen Huang mentioned in Taiwan that Nvidia used to have 95% market share of graphics processing models in China, however it’s been cut to 50% underneath chip restrictions. In a submitting with the Securities and Alternate Fee in February, Nvidia mentioned it recorded $17.1 billion in annual gross sales to prospects that had an deal with in China, together with Hong Kong, the corporate’s fourth-largest market.
Huang has contended in current weeks that limiting the export of Nvidia’s chips to China will solely encourage engineers there to give you their very own processors, bolstering the nation’s AI semiconductor ecosystem and additional threatening U.S. technological management.
Nvidia obtained some good regulatory information in Might, when the Trump administration introduced it was rescinding the “AI diffusion rule,” which entailed much more restrictions on exporting AI chips to China and different nations. Nvidia and AMD opposed the restrictions.
Nonetheless, the Trump administration did not fully again away from regulating Nvidia’s exports, saying on the time that it was planning a brand new, less complicated substitute for the diffusion rule.
Morgan Stanley analysts count on questions to stay about Nvidia’s substitute H20 and its plans for China effectively after this week’s earnings report. They famous that Nvidia is lobbying for licenses to ship the H20, which may be granted under the current system.
“There’s a dialog available about what’s going to ultimately be allowed in China — however in all probability not on this earnings name,” they wrote.
