Nvidia Corp (NVDA) Stock: Earnings Shine But China Troubles Loom Large

TLDR

Table of Contents

Nvidia beat Q1 earnings expectations with 81 cents adjusted EPS versus 73 cents expected and revenue of $44.1 billion versus $43.3 billion expected
Q2 revenue guidance of $45.0 billion came in below Wall Street estimates of $45.9 billion due to China export restrictions
Company faces $8 billion revenue hit in Q2 from H20 chip ban in China, bringing total six-month loss to $10.5 billion
Data center revenue surged 73% year-over-year to $39.1 billion with cloud providers accounting for nearly 50% of segment revenue
Blackwell Ultra AI servers entered test shipments this month with production shipments expected later this quarter

Nvidia delivered better-than-expected first quarter results but provided weaker guidance due to mounting pressure from China trade restrictions. The chip giant posted adjusted earnings per share of 81 cents, beating analyst estimates of 73 cents.

Revenue reached $44.1 billion for the April quarter, up 69% from the same period last year. Wall Street had expected $43.3 billion in revenue.

The company’s data center business continued its strong performance with revenue of $39.1 billion. This represented a 73% increase compared to the previous year.

Large cloud computing providers made up just under 50% of data center revenue during the quarter. This shows continued demand from major tech companies building AI infrastructure.

However, Nvidia’s outlook disappointed investors and analysts. The company guided for second quarter revenue of $45.0 billion at the midpoint of its range.

🚀 Nvidia $NVDA stock rallies after Q1 earnings beat
🟢 EPS of $0.81 beating expectations of $0.75
🟢 Revenue of $44.1B beating expectations of $43.25B
👉 AI demand ‘incredibly strong,’ but Q2 guidance misses estimates
📈 Nvidia shares were up 7.4% after the release pic.twitter.com/cMpCvlL0Kz
— Trader Edge (@Pro_Trader_Edge) May 29, 2025

This fell short of Wall Street’s consensus estimate of $45.9 billion. The miss stems largely from ongoing trade restrictions with China.

China Export Rules Create Major Headwind

Nvidia faces substantial revenue losses from export restrictions on its H20 chip designed for the Chinese market. The company reported a $2.5 billion sales hit in the first quarter alone.

Looking ahead, Nvidia expects an $8 billion revenue impact in the current second quarter. This brings the total six-month revenue loss to $10.5 billion.

CEO Jensen Huang addressed the China situation directly during the earnings call. “The $50 billion China market is effectively closed to US industry,” Huang said.

The H20 export ban ended Nvidia’s Hopper data center business in China. Huang explained that the company cannot reduce Hopper specifications further to comply with restrictions.

“We are exploring limited ways to compete, but Hopper is no longer an option,” the CEO continued. He noted that China’s AI development will proceed with or without US chips.

Without the China-related charge, Nvidia’s adjusted earnings per share would have been 96 cents. The company took a $4.5 billion charge related to excess H20 inventory.

Blackwell Chip Progress Continues

Despite the China challenges, Nvidia made progress with its next-generation Blackwell architecture. CFO Colette Kress said the company sent test shipments of Blackwell Ultra GB300 NVL72 AI servers to customers earlier this month.

Production shipments are expected to begin later in the current quarter. This represents an important milestone for Nvidia’s latest AI chip technology.

Huang emphasized strong global demand for AI infrastructure outside of China. “Global demand for NVIDIA’s AI infrastructure is incredibly strong,” he said in the earnings release.

AI inference token generation has surged tenfold in just one year according to the CEO. As AI agents become more mainstream, demand for AI computing is expected to accelerate further.

Nvidia shares rose 4.2% in after-hours trading following the earnings report. The stock gained over 6% in premarket trading the following day as investors focused on the earnings beat rather than the guidance miss.

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