Jensen Huang, co-founder and CEO of Nvidia Corp., speaks throughout a information convention in Taipei on Could 21, 2025.
I-hwa Cheng | Afp | Getty Photos
Nvidia continues to see large development from gross sales of graphics processors, with demand for synthetic intelligence infrastructure exhibiting no indicators of cooling.
However for the AI chipmaker, the temper is totally different heading into Wednesday’s earnings report than it has been in latest quarters. There’s one massive cause why: China.
On April 9, the Trump administration despatched Nvidia a letter, and mentioned it was requiring an export license for the corporate’s H20 chip, a model of its Hopper processor specifically designed for the Chinese language market to adjust to earlier U.S. restrictions.
Courting again to President Biden’s time period, the U.S. authorities has been involved that AI chips from Nvidia and different semiconductor corporations like Superior Micro Units can be utilized to create supercomputers for adversaries’ army functions.
Following the brand new restrictions, Nvidia mentioned it might take a $5.5 billion writedown on stock. Analysts known as it the largest writedown within the historical past of the chip business. The potential impression on future income is hefty.
“This stock write-off implies a $15 billion H20 income hit on a rolling 12-month foundation,” wrote David O’Connor, an analyst at BNP Paribas, in a report on Tuesday.
For the quarter led to April, analysts anticipate Nvidia to report 66% income development to $43.28 billion, in accordance with LSEG. Whereas that stage of development is way greater than the type of growth at any of Nvidia’s megacap friends, it marks a pointy deceleration from a 12 months in the past, when the corporate recorded development of over 250%.
Due to the brand new export license necessities, there’s lots of uncertainty surrounding projections for the remainder of the 12 months. The typical analyst estimate is predicting development within the present quarter of 53%, with related a quantity anticipated for the total fiscal 12 months, which ends in January.
Morgan Stanley analysts wrote in a report on Tuesday that Nvidia faces a much bigger hit than anticipated.
“Whereas our considering on the time was that this was at the very least partly anticipated by the administration workforce, it turned clear after the ban that the corporate had been getting indications that H20 can be OK, and that they have been materially stunned,” the analysts wrote.
Nvidia shares have bounced again of late after a tough begin to the 12 months and are actually up about 1% in 2025, whereas the Nasdaq is down about 1%.
Earlier this month, Huang mentioned in Taiwan that Nvidia used to have a 95% market share of GPUs in China, however it’s been minimize to 50% underneath chip restrictions. In a submitting with the SEC in February, Nvidia mentioned it recorded $17.1 billion in annual gross sales to clients that had an handle in China, together with Hong Kong, the corporate’s fourth-largest market.
Huang has argued in latest weeks that limiting the export of Nvidia’s chips to China will solely inspire engineers there to give you their very own processors, bolstering the nation’s AI semiconductor ecosystem and additional threatening U.S. technological management.
Nvidia received some good regulatory information in Could, when the Trump administration introduced it was rescinding the “AI diffusion rule,” which entailed much more restrictions on exporting AI chips to China and different international locations. Nvidia and AMD opposed the restrictions.
Nevertheless, the Trump administration did not solely again away from regulating Nvidia’s exports, saying on the time that it was planning a brand new, easier alternative for the diffusion rule.
Morgan Stanley analysts anticipate questions to stay about Nvidia’s alternative H20 and its plans for China nicely after this week’s earnings report. They famous that Nvidia is lobbying for licenses to ship the H20, which will be granted underneath the present system.
“There’s a dialog available about what’s going to finally be allowed in China — however most likely not on this earnings name,” they wrote.
WATCH: Count on Nvidia’s steering to be ‘higher than feared’
