Nvidia beat Wall Street expectations with huge revenues, but CEO Jensen Huang said tightening of the company’s export restrictions on China’s AI chips has actually shut down NVIDIA from one of the world’s largest AI markets.
“The platform that wins China will lead globally as half of global AI researchers are located there. Today, the $50 billion Chinese market effectively shuts down the U.S. industry,” Huang said in a phone call with analysts yesterday (May 28). “The question is whether one of the world’s largest AI markets will run on U.S. platforms. The U.S. wins when AI models like DeepSeek and Qwen run best on U.S. infrastructure.”
Nvidia reported $44.1 billion in revenue in the February-April quarter, up 69% from the same period last year. The company’s data center business includes the sale of AI chips, generating $39.1 billion in revenue, a year-on-year increase of 73%. Quarterly net revenue was $18.8 billion, up 26% from last year. However, gross margin fell to 61%, the company’s lowest since 2022. NVIDIA shares grew more than 4% in financial results.
During the quarter, NVIDIA generated $4.5 billion in stock writes related to unsold H20 chips, which were customized for the Chinese market to comply with federal regulations prohibiting U.S. companies from selling advanced AI chips to China. New export restrictions that came into effect in April ban the use of H20 in Chinese supercomputing and military programs. Unlike earlier policies, the new rules do not include grace periods for NVIDIA to sell existing stocks or fulfill pending orders.
Huang explained that there are no other buyers of the H20 chip, and Nvidia can absorb the cost of free stock.
Nevertheless, Huang stressed that global demand for AI infrastructure is still accelerating. “Artificial intelligence is growing faster and will change more than any platform before,” he said. “Now, every country sees AI as the core of the next industrial revolution – a new industry that produces intelligence and infrastructure for every economy. Countries are investing in AI as they have done on electricity and the internet.”
Huang also noted that there is a huge demand for NVIDIA’s latest AI platform, including the new Blackwell NVL72, a rack-scale AI supercomputer he calls “a thinking machine designed for reasoning.”
“This is the beginning of a strong growth wave. Today, we have more orders than we did last time talking about GTC orders,” he said. “Grace Blackwell is in full production and we now have a variety of important growth engines.”
