Nvidia's rapid expansion continues, unhindered by restrictions on Chinese exports.
Nvidia Reports Surge in Q1 Revenue Despite China Export Ban
In a surprising turn of events, AI specialist Nvidia has reported a significant increase in its first-quarter revenue, despite stricter U.S. restrictions on AI chip exports to China. The company's revenue for the quarter reached $44.1 billion, marking a 69% year-over-year jump. This surpassed the average analyst expectation of $43.3 billion.
Revenue in the data center segment, however, fell slightly below expectations at $39.1 billion, representing a 73% year-over-year increase. Earnings per share increased by 27% year-over-year to $0.76, but decreased by 15% compared to the previous quarter.
Nvidia's shares rose by 3% in after-hours trading on Wall Street following the report. However, the company forecasts slower growth in the second quarter due to the headwinds caused by the U.S. export restrictions. For the period from April to June, Nvidia expects revenue of $45 billion, which would represent a mere 2% increase compared to the previous quarter. Analysts predict an average revenue of $45.9 billion for the same period.
The renewed tightening of U.S. export restrictions for high technology to China is expected to cost Nvidia $8 billion in potential revenue. The company now expects growth to slow down, given the ongoing restrictions.
Nvidia's CEO, Huang, has criticized the U.S. strategy of embargoing China, stating that it has only driven Chinese competitors like Huawei to develop their own chips. Nvidia had introduced several special variants of its AI chips for the Chinese market, but each tightening of U.S. regulations required adjustments to these products. A stripped-down version of the current flagship chip "Blackwell" is expected to be available soon, compliant with the current regulations.
Despite the challenges posed by the export ban, Nvidia stands to benefit from investments in AI infrastructure by major tech companies like Meta, Alphabet, Apple, Amazon, and Microsoft. This ongoing demand for AI-related hardware is seen as a significant driver of Nvidia's future growth. Analysts maintain a positive outlook on Nvidia's stock, with many holding 'buy' or 'outperform' ratings, and a consensus price target suggesting a potential upside of around 20% from current levels.
Sources: ntv.de, mau/rts.
In other news, as part of a trade agreement by U.S. President Donald Trump, Nvidia has announced plans to sell hundreds of thousands of AI chips to Saudi Arabia, including 18,000 of its "Blackwell" chips to a startup owned by the country's sovereign fund. This move could potentially offset some of the revenue losses due to the China export ban.
- Given the ongoing challenges with the U.S. export restrictions, Nvidia is expected to experience a revenue loss of approximately $8 billion in the Chinese market, but the company may offset some of these losses by selling AI chips to Saudi Arabia, such as 18,000 "Blackwell" chips to a startup owned by the country's sovereign fund.
- Despite the revenue surge in Q1, Nvidia's focus on economic and social affairs, employment, and technology has not wavered. The ongoing demand for AI-related hardware from major tech companies like Meta, Alphabet, Apple, Amazon, and Microsoft is seen as a significant driver of Nvidia's future growth, with analysts maintaining a positive outlook on Nvidia's stock and finance sector.
