Nvidia (NVDA) reported stronger-than-expected first-quarter sales but issued a cautious outlook for the current quarter, forecasting revenue below Wall Street's consensus due to new U.S. export restrictions. The semiconductor giant expects an $8 billion hit from stringent U.S. controls on the sale of its critical H20 artificial intelligence chips to China, reflecting the rising geopolitical tensions between Washington and Beijing.
Despite the significant impact on its China sales, Nvidia shares rose 3% in extended trading as investors appeared relieved that the restrictions had not been as severe as initially feared. Earlier forecasts suggested a potential loss of up to $15 billion; however, Nvidia reduced this estimate to $8 billion for the second quarter after mitigating losses through material reuse and adjusting its supply chain.
Market Overview:- Nvidia forecasts Q2 revenue of $45 billion, below analyst estimates.
- Shares gain 3% after hours, as export losses smaller than feared.
- Semiconductor sector closely monitoring ongoing trade restrictions.
- Nvidia faces $8 billion revenue loss from new U.S. chip export curbs to China.
- Company initially anticipated a $15 billion impact before supply adjustments.
- AI datacenter market maturity adds to Nvidia’s growth challenges.
- Investors to watch regulatory developments closely for further impacts.
- Big tech cloud providers’ AI infrastructure spend remains a key factor.
- Nvidia's management may offer additional mitigation strategies going forward.
The updated outlook underscores Nvidia's challenges in navigating the geopolitical landscape, especially as the U.S. escalates efforts to restrict China's access to advanced semiconductor technology. While major tech companies such as Microsoft and Alphabet maintain aggressive investments in AI infrastructure, ongoing regulatory uncertainty could influence their future spending decisions, potentially reshaping demand for Nvidia’s advanced chips.
Nvidia, whose stock nearly tripled last year, has had a relatively flat 2025, as investors balance the immense potential of artificial intelligence technology with intensifying global trade tensions. Analysts suggest that the company's strong market position in AI will help it adapt to regulatory pressures, although prolonged restrictions on Chinese exports could present longer-term growth headwinds.
