Nvidia beats on Q1 revenue, says it expects an additional $8 billion charge on H20 losses in Q2
Nvidia (NVDA) reported its first quarter earnings after the bell on Wednesday, beating expectations on revenue but falling short on adjusted earnings per share (EPS) due to the impact of the ban on shipments of its H20 chips to China. The company also said it expects to miss out on roughly $8 billion in sales of H20s in the second quarter.
Nvidia stock was up 5% following the announcement.
For the quarter, Nvidia reported EPS of $0.81 on revenue of $44.1 billion, compared to analysts’ expectations of $0.93 on revenue of $43.3 billion, according to Bloomberg analyst consensus data. Without the charge for the H20 chips in Q1, adjusted EPS would have topped out at $0.96.
The company reported adjusted EPS of $0.61 on revenue of $26 billion in the same period last year.
Nvidia’s data center segment, its largest business, saw revenue of $39.1 billion, up from $22.5 billion last year but behind Wall Street expectations of $39.2 billion.
According to Nvidia CFO Colette Kress, Nvidia generated just under 50% of its data center revenue via hyperscalers like Amazon (AMZN), Google (GOOG), and Microsoft (MSFT).
“Global demand for Nvidia’s AI infrastructure is incredibly strong,” CEO Jensen Huang said in a statement.
“AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world are recognizing AI as essential infrastructure — just like electricity and the internet — and Nvidia stands at the center of this profound transformation,” he said.
Nvidia had to write down $4.5 billion in charges related to the Trump administration’s ban on sales of its H20 chip to China. The company announced the news in an April regulatory filing.
Nvidia’s shares have fluctuated wildly since the start of the year as the company has dealt with setbacks ranging from export controls to concerns related to expected semiconductor tariffs.
But a last-minute reprieve from Washington’s planned AI diffusion rule, which was put in place by the Biden administration to limit GPU sales to certain countries, and major investment announcements during Trump’s visit to the Middle East have increased Nvidia’s share price to more than $136 — slightly less than 2% up from the stock’s value at the start of the year, and up roughly 20% over the past 12 months as of Wednesday.
Nvidia’s report follows the company’s showing at the annual Computex Taipei trade show in Taiwan, where it showcased new technologies, such as a cloud offering that gives customers access to cloud-based versions of Nvidia’s GPUs via third-party providers like CoreWeave (CRWV) and Foxconn (2354.TW).
Nvidia specifically designed the H20 to meet the Biden administration’s restrictions on AI chips destined for China. But DeepSeek sent shockwaves through Washington and Wall Street when it proved it could produce powerful AI models using below top-of-the-line Nvidia chips. As a result, Trump imposed tighter restrictions on the company’s chips, banning the sale of H20s in the country.
“There is simply no offset to this,” Morgan Stanley analyst Joseph Moore wrote in an investor note ahead of the earnings report.
“Blackwell demand is very strong … but they are supply constrained, and lost H20 does not result in more Blackwell supply. We assume that this takes about $1 billion out of the April [quarter] — impact was effective April 7, so 23 days of lost H20 revenue—and about $5 billion of lost revenue in July. We actually think demand for H20 is much higher, driven by the surge of inference in China.”
According to Reuters, Nvidia is now working on a modified version of the H20 that meets the Trump administration’s performance requirements.
During a press conference at Computex, Huang came out swinging against the US’s policies, saying that they’ve been a failure and that they benefit China’s own AI chipmakers, according to Bloomberg.
Nvidia received relief from some export restrictions when the Trump administration axed the Biden administration’s planned AI diffusion rules, which would have created a tiered system that determined which countries could purchase AI chips and which required special licenses or couldn’t get them at all. The administration plans to introduce a new set of export requirements in the future.
Jensen Huang, co-founder and CEO of Nvidia, speaks during a news conference in Taipei on May 21. (I-Hwa Cheng/AFP via Getty Images) ·I-HWA CHENG via Getty Images
“For investors worried about AI capex sustainability, we now have another deep pocketed customer willing and capable to spend large amounts of money on a clearly strategic push as Saudi Arabia attempts to position itself as a regional and global AI hub,” Bernstein analyst Stacy Rasgon wrote in an investor note.
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