Nvidia Delivers Strong Forecast Despite China Setback
Chip giant’s AI dominance drives growth, though export curbs cut into China sales
Nvidia, the world’s most valuable semiconductor company, issued a robust revenue forecast for the current quarter, bolstered by surging demand for its AI hardware—despite a sharp hit from ongoing trade tensions with China.
The chipmaker expects revenue to reach US$45 billion in the fiscal second quarter ending July, aligning with analysts’ projections. The figure includes an estimated US$8 billion shortfall tied to US export restrictions that continue to hamper Nvidia’s business in China.
Shares of Nvidia climbed 4% in after-hours trading on Wednesday following the announcement.
The upbeat outlook reflects the company’s rapid ramp-up of production for its new Blackwell chip architecture, a key driver of demand from customers developing artificial intelligence (AI) models. Nvidia currently dominates the global market for AI accelerators—specialized chips that power large-scale machine learning applications—and has steadily expanded its product suite to offer full-stack systems.
“Global demand for Nvidia’s AI infrastructure is incredibly strong,” said CEO Jensen Huang, emphasizing that the company is now delivering entire computer systems to help enterprises accelerate their AI deployments.
The company’s vision for AI extends far beyond chips. Huang has repeatedly described Nvidia’s role in shaping a “new industrial revolution” powered by AI infrastructure that he expects will transform sectors across the global economy.
Revenue Growth Slows, But Remains Solid
For the fiscal first quarter ended April 27, Nvidia reported revenue of US$44.1 billion, up 69% from a year earlier—slightly above Wall Street’s expectations of US$43.3 billion. Earnings came in at 96 US cents per share, beating estimates of 93 cents.
Though impressive, the growth rate marks Nvidia’s slowest pace in two years, a reflection of the company’s own soaring performance benchmarks and rising investor expectations.
Its key data center segment, which now outpaces the combined revenue of all its closest rivals, brought in US$39.1 billion—just shy of forecasts. Gaming revenue, once the company’s core business, reached US$3.8 billion, significantly beating the consensus of US$2.85 billion. Automotive revenue came in at US$567 million.
China Crackdown Casts a Shadow
Still, concerns linger over Nvidia’s longer-term outlook in China. In April, the US government expanded export restrictions on high-end chips, effectively locking Nvidia out of China’s data center market. The company acknowledged a US$4.5 billion writedown related to these restrictions.
Adding to the pressure, Chinese regulators are scrutinizing Nvidia over commitments it made during its acquisition of networking firm Mellanox in 2020. Authorities have warned Nvidia to maintain supply to domestic firms or risk facing financial penalties and operational restrictions.
“If regulators conclude that we have failed to fulfil such commitments or violated Chinese law, we could be subject to penalties,” the company disclosed.
Analysts warn the broader impact of escalating US-China tech tensions could create headwinds for Nvidia and the global AI chip industry.
“The concern is that policy risks and trade frictions could dampen data center expansion and AI chip demand in the near term,” noted Jacob Bourne, an analyst at eMarketer.
Looking Beyond China
Despite the China setback, Nvidia is eyeing new opportunities in emerging AI markets. Recent policy shifts, including US-led tech initiatives in the Middle East, may offer new avenues for growth. The Biden administration’s outreach has included major AI investments in Saudi Arabia and surrounding regions—reversing the previous administration’s restrictions.
Investors remain keenly focused on Nvidia’s trajectory. The company has soared to a market capitalization exceeding US$3 trillion, accounting for nearly 10% of the Nasdaq’s total value. Expectations are sky-high: even modest deviations from growth projections spark concerns about the future pace of the AI boom.
Nvidia is forecast to generate nearly US$200 billion in revenue this fiscal year—an extraordinary jump from US$27 billion just two years ago.
As the pioneer of accelerated computing and the undisputed leader in AI silicon, Nvidia now faces the challenge of sustaining breakneck growth while navigating geopolitical flashpoints. For now, the outlook remains strong—but China’s shadow looms large.
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