Nvidia closed out its first fiscal quarter with strong earnings that beat Wall Street expectations, but CEO Jensen Huang said tightening export restrictions on the company’s A.I. chips to China have effectively shut Nvidia out of one of the world’s largest A.I. markets.
“With half of the world’s A.I. researchers based there, the platform that wins China is positioned to lead globally. Today, the $50 billion China market is effectively closed to U.S. industry,” Huang said on a call with analysts yesterday (May 28). “The question is whether one of the world’s largest A.I. markets will run on American platforms. America wins when A.I. models like DeepSeek and Qwen run best on American infrastructure.”
Nvidia reported $44.1 billion in revenue for the February–April quarter, up 69 percent from the same period last year. The company’s data center business, which includes the sale of A.I. chips, generated $39.1 billion in revenue, a 73 percent year-over-year increase. Quarterly net income came in at $18.8 billion, up 26 percent from last year. However, gross margins fell to 61 percent—the company’s lowest since 2022. Nvidia shares rose more than 4 percent today following the financial results.
During the quarter, Nvidia incurred a $4.5 billion inventory write-down tied to unsold H20 chips, which were custom-built for the Chinese market to comply with federal regulations prohibiting U.S. companies from selling advanced A.I. chips to China. New export restrictions imposed by the Trump administration, which took effect in April, banned the use of H20 in Chinese supercomputing and military projects. Unlike earlier policies, the new rules included no grace period for Nvidia to sell existing inventory or fulfill pending orders.
Huang explained that the H20 chip has no alternative buyers, leaving Nvidia to absorb the cost of idle inventory.
Still, Huang emphasized that global demand for A.I. infrastructure continues to accelerate. “A.I. is growing faster and will be larger than any platform shifts before,” he said. “Every nation now sees A.I. as core to the next industrial revolution—a new industry that produces intelligence and foundational infrastructure for every economy. Nations are investing in A.I. like they once did in electricity and the Internet.”
Huang also pointed to strong demand for Nvidia’s latest A.I. platforms, including the new Blackwell NVL72—a rack-scale A.I. supercomputer he described as “a thinking machine designed for reasoning.”
“This is the start of a powerful new wave of growth. We have more orders today than we did the last time I spoke about orders at GTC,” he said. “Grace Blackwell is in full production, and we now have multiple significant growth engines.”