NVIDIA Stock Gains On Q1 Results; Sees $8 Bln China Impact

(RTTNews) - Shares of Nvidia Corp. gained around 5 percent in the extended trading on Wednesday and is currently up around 6 percent in the pre-market activity on the Nasdaq, after the artificial intelligence chipmaker reported significantly higher earnings in its first quarter, despite an expected $4.5 billion charge associated with H20 AI chip export barring to China. Revenues were 69 percent higher, as Blackwell ramp, the fastest in the company's history, drove strong growth in Data Center revenue.

The company also issued second-quarter outlook, which reflects around $8 billion loss in H20 revenue, due to the recent export control limitations to China. However, the anticipated decline in China revenue would be partially offset by the continued ramp of Blackwell in Data Center.

In its earnings call, Jensen Huang, President and Chief Executive Officer, said, "We are still evaluating our limited options to supply data center compute products compliant with the U.S. government's revised export control rules. Losing access to the China AI accelerator market, which we believe will grow to nearly $50 billion, would have a material adverse impact on our business going forward and benefit our foreign competitors in China and worldwide."

The firm in April had stated that it would take $5.5 billion in charges after the U.S. government barred exports of its H20 AI chip to China, a key AI market, after the Trump administration demanded new licensing requirements for exports to China of Nvidia's H20, one of its most popular AI chips.

The $4.5 billion charge was less than initially anticipated as the firm was able to reuse certain materials.

Regarding export control, Huang noted that with half of the world's AI researchers based in China, the platform that wins China is positioned to lead globally, but the $50 billion China market is effectively closed to U.S. industry.

He added that the H20 export ban ended the firm's Hopper Data Center business in China, and that it cannot reduce Hopper further to comply. As a result, the firm is taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed. "We are exploring limited ways to compete, but Hopper is no longer an option," he added.

Looking ahead, for the second quarter, revenue is expected to be $45.0 billion, plus or minus 2 percent.

The Wall Street analysts on average expect the company to report revenues of $46.2 billion. Analysts' estimates typically exclude special items.

Gross margins, on a reported and adjusted basis, are expected to be 71.8 percent and 72.0 percent, respectively, plus or minus 50 basis points. The company said it is continuing to work toward achieving gross margins in the mid-70 percent range late this year.

Further, Nvidia said it will pay its next quarterly cash dividend of $0.01 per share on July 3, to all shareholders of record on June 11.

In its first quarter, Nvidia's net income came in at $18.775 billion, up 26 percent from $14.881 billion last year. Earnings per share climbed 27 percent to $0.76 from $0.60 a year ago.

Sequentially, first-quarter earnings dropped 15 percent from the preceding fourth quarter.

On April 9, NVIDIA was informed by the U.S. government that a license is required for exports of its H20 products into the China market, and the firm incurred a $4.5 billion charge in the first quarter associated with H20 excess inventory and purchase obligations as the demand for H20 diminished.

Adjusted earnings were $19.894 billion or $0.81 per share for the period, compared to $15.238 billion or $0.61 per share a year ago.

Earnings per share excluding H20 charge and related tax impact was $0.96.

Gross margin, meanwhile, dropped 17.9 percentage points from last year to 60.5 percent.

The company's revenue for the period rose 69.2 percent to $44.062 billion from $26.044 billion last year. Sequentially, revenues grew 12 percent.

Data Center revenue of $39.1 billion surged 73 percent from a year ago. Blackwell contributed nearly 70 percent of Data Center compute revenue with a transition from Hopper nearly complete.

Sales of H20 products were $4.6 billion for the first quarter of fiscal 2026 prior to the new export licensing requirements. NVIDIA said it was unable to ship an additional $2.5 billion of H20 revenue in the first quarter due to the new export controls.

First-quarter Gaming revenue was $3.8 billion, up 42 percent from a year ago, and Professional Visualization revenue grew 19 percent. Automotive revenue climbed 72 percent from a year ago.

In the after-hours trading on the Nasdaq, NVIDIA shares gained 4.9 percent to $141.37, after losing 0.5 percent in the regular trading.

In the pre-market activity, the shares are currently trading at $143.06, up 6.1 percent.

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