Nvidia reported second-quarter revenue below market predictions, predicting a $8 billion impact to sales from stricter US restrictions on exporting its AI chips to China, a major semiconductor market, while exceeding sales expectations during the fiscal first quarter.
In extended trading, shares of the most valuable semiconductor company in the world continued to rise by four percent. Compared to 2024, when the value of the shares almost tripled, the stock is comparatively unchanged so far this year. The market for AI data centers is also maturing, and Nvidia is now subject to trade restrictions on what it can offer.
Nvidia's access to one of the biggest semiconductor markets has been stifled by tighter export regulations resulting from Washington's years-long efforts to prevent Beijing from obtaining top-tier U.S. technology.
However, Nvidia inked new agreements in the Middle East earlier this month, including the initial stages of a 10-square-mile data center complex in the United Arab Emirates that may eventually employ five gigawatts of AI infrastructure. Similar agreements have also been announced by the corporation in Taiwan and Saudi Arabia.
Nvidia revealed in April that it anticipated a $5.5 billion charge due to new U.S. restrictions on the sale of its H20 chips to China, the only AI processors it was legally allowed to export to the nation.
In May, CEO Jensen Huang estimated that the restrictions would have a $15 billion revenue impact.
Nvidia claimed that because it was able to reuse some resources, the actual first-quarter charge resulting from the H20 limits was $1 billion lower than anticipated. According to the company, its H20 sales were down $2.5 billion in the first quarter, and it anticipates missing $8 billion in the second.
Nvidia did, however, also report that the H20 generated $4.6 billion in sales during the first quarter, with China accounting for 12.5 percent of total revenue.
Concerns about such expenditure continue in the face of quickly shifting global trade policies, despite the fact that big cloud businesses like Microsoft and Alphabet have maintained their commitment to spending billions this year on developing infrastructure for AI data centers.
In the first quarter, Nvidia made 81 cents per share on an adjusted basis. As Wall Street attempted to evaluate the effect of limits on some of Nvidia's semiconductor sales to China, analyst estimates were highly disparate.
Data gathered by LSEG indicates that 17 analysts estimated the company's adjusted quarterly earnings to be 93 cents per share after Nvidia announced on April 15 that H20 shipments will need additional licenses.
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According to data provided by LSEG, the artificial intelligence market bellwether predicts sales of $45 billion, plus or minus two percent, in the second quarter, while experts' average forecast is $45.90 billion.