Nvidia’s (NVDA) first-quarter results landed with mixed signals but sent its shares soaring nonetheless.
The AI chip titan posted revenue of $44.1 billion—well ahead of expectations—but earnings per share (EPS) fell short of analyst forecasts, primarily due to a $4.5 billion write-down on its China-bound H20 chips.
EPS came in at $0.81, below the anticipated $0.93. However, when excluding the China-related charge, adjusted EPS would have hit $0.96—a beat. Wall Street appeared to focus on that adjusted figure, sending Nvidia’s stock up more than 6% in premarket trading Thursday. By midday, shares had risen over 4%, trading above $140.
The earnings report came amid growing geopolitical friction between the U.S. and China. Nvidia had designed the H20 chip to comply with U.S. export controls, but even that effort fell short. The result: not only the multi-billion-dollar write-down but also a projected $8 billion shortfall in potential Q2 revenue.
AI Remains the Engine: Data Center Revenue Surges
Despite the China setback, Nvidia’s data center business—which now generates the bulk of its revenue—remains a force of nature. The unit pulled in $39.1 billion, up from $22.5 billion in the same period last year. Hyperscalers such as Amazon (AMZN), Google (GOOG), and Microsoft (MSFT) accounted for nearly half of that, according to CFO Colette Kress.
CEO Jensen Huang was unequivocal: “Global demand for Nvidia’s AI infrastructure is incredibly strong,” he said. Token generation for AI inference—an indicator of how much computing power is being consumed—has exploded tenfold in just a year. Microsoft alone processed over 100 trillion tokens in Q1.
Looking ahead, Kress highlighted that Nvidia has “line of sight” to massive projects requiring “tens of gigawatts” of AI infrastructure. While exact timelines remain unclear, the scale indicates how central Nvidia remains to the future of global computing.
Navigating Risks: Geopolitics, Tariffs, and the AI Curve
While Nvidia’s performance sent shockwaves across the tech sector—lifting shares of chipmakers from Tokyo to Amsterdam—the risks remain very real. The $4.5 billion charge for unsellable inventory is only part of the picture.
The company missed out on an estimated $2.5 billion in Q1 revenue due to the H20 export halt and expects to miss another $8 billion in Q2. Nvidia has not yet announced a workaround product for the Chinese market but hinted it may develop a streamlined version of its Blackwell chip in the future.
CEO Huang was vocal in his criticism of U.S. export policy: “The platform that wins China is positioned to lead globally,” he said, warning that restricting access to U.S. AI chips could backfire by encouraging homegrown alternatives in China.
Yet analysts see potential upside. Angelo Zino of CFRA Research noted that Nvidia’s non-China business appears to be running “well ahead of expectations.” He sees Nvidia’s efforts to re-enter China, along with sovereign AI deals in places like Saudi Arabia, as key growth levers.
Indeed, new deals are emerging. A major Middle East order for 18,000 GPUs, for instance, offers a glimpse into how Nvidia might offset Chinese losses with new international partnerships.
Market Response: Nvidia Still the Bellwether
Nvidia’s report served as a bellwether for global AI and semiconductor demand. Shares of companies linked to the sector rallied in sympathy—SK Hynix gained nearly 2%, Tokyo Electron rose 4%, and U.S. names like Marvell (MRVL) and Qualcomm (QCOM) also posted gains.
Though Nvidia’s stock has swung sharply this year, it’s now trading roughly 20% above its value from 12 months ago. Despite looming risks—tariffs, geopolitical volatility, and potential AI supply gluts—investors remain bullish.
With AI evolving from experimental models to real-world applications and "AI agents" on the rise, Nvidia remains at the center of the storm. If export policy doesn’t shift, the company’s next growth chapters may be written in places like the Gulf and Southeast Asia rather than Beijing or Shanghai.
Still, the message from Wall Street is clear: even with a $4.5 billion setback, Nvidia is too important to ignore.
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