Nvidia Q1 Earnings Preview: Blackwell Ramp, China Risks, and AI Megatrend in Focus

Nvidia (NVDA) is set to report its first-quarter fiscal 2026 earnings on Wednesday, May 28, amid intense investor scrutiny. The chipmaker faces a confluence of opportunities and challenges: accelerating AI-driven demand, supply chain hiccups tied to new architectures, U.S.-China tensions, and shifting macro dynamics around tariffs. While a $5.5 billion write-down related to China-export restricted H20 inventory will weigh on this quarter, Nvidia’s pivot to its new Blackwell platform, surging AI hyperscaler capex, and broader sovereign AI adoption offer reasons for optimism. In the words of CFRA analyst Angelo Zino, “The confidence has definitely increased here for a lot of investors.”

Watch: CFRA analyst Angelo Zino breaks down this week's big tech earnings

Market Expectations & Key Metrics Wall Street consensus expects

China Restrictions and H20 Impact Nvidia’s China exposure has shrunk to under 5% of sales but remains geopolitically sensitive. The U.S. banned sales of its H20 chips, specially designed to comply with earlier export controls, prompting a $5.5 billion write-down. Nvidia is actively preparing a new version of the H20 chip that could launch as early as July, mitigating future downside. CEO Jensen Huang has highlighted China’s long-term importance, estimating its AI market could reach $50 billion within a few years.

AI Diffusion Rule Rescinded In a win for U.S. chipmakers, the Trump administration recently rescinded the AI Diffusion Rule, which would have restricted exports of high-performance chips even to allies. Nvidia publicly opposed the measure, signaling how critical international demand is for its CUDA ecosystem. CFRA’s Zino suggests the cancellation offsets much of the China downside already baked into expectations.

Tariffs and Trade Dynamics While the U.S.-China tariff situation has eased modestly, the broader trade landscape remains volatile. Tariffs on Taiwan-made semiconductors (Nvidia’s supply chain base) add cost pressure, though not enough to deter hyperscaler demand. Angelo Zino notes that Nvidia chips, priced at $30,000–40,000 each, are relatively insulated from demand shocks caused by modest tariff upticks.

Hyperscaler and Sovereign Spending Trends The AI buildout by U.S. tech giants continues to drive Nvidia’s growth. In 2025, the Magnificent Seven are expected to spend over $320 billion on AI infrastructure, up from $230 billion in 2024. Amazon is allocating $100 billion, Microsoft $80 billion, Google $75 billion, and Meta as much as $65 billion. Nvidia is deeply embedded in each. Saudi Arabia and the UAE recently inked $20 billion-plus deals with Nvidia for sovereign AI projects. According to Zino, these geopolitical tailwinds could help Nvidia offset lost China revenue.

Q2 and Second Half Outlook Guidance for Q2 is expected to be conservative, reflecting the tail impact of H20 restrictions and ongoing supply constraints for GB200. Consensus looks for $46 billion in revenue. However, Nvidia has indicated that the Blackwell ramp in 2H26 should be significant. The GB300 Ultra is expected to debut in Q3, offering performance gains and higher ASPs.

Valuation and Financial Health Nvidia trades at a blended P/E of 38.4x—elevated, but justified given expected FY26 EPS growth of 47%. The company has $38.5 billion in cash against $8.5 billion in debt, giving it ample financial flexibility. Zino sees fair value closer to 45-47x EPS, implying a target price around $140 based on $2.99 EPS for FY25. Nvidia's 56% net margins and dominant AI market position support this bullish stance.

Analyst Sentiment and Risk Factors Stifel, Piper Sandler, and KeyBanc all maintain bullish outlooks, though they expect a "messy" Q1 print and guidance. Risks include further export curbs, GB200 ramp delays, and macro-driven CAPEX cuts. However, momentum from the Blackwell launch, hyperscaler demand, and policy tailwinds outweigh near-term headwinds.

Conclusion Despite near-term turbulence, Nvidia remains the cornerstone of the global AI infrastructure buildout. With hyperscaler capex climbing, sovereign nations investing in AI sovereignty, and the Blackwell platform set to scale, Nvidia is positioned for durable growth. As Zino notes, "Nvidia's pipeline remains extremely strong." Investors will be closely watching commentary on China, the Blackwell ramp, and margin recovery to gauge how quickly the company can turn the corner. In a volatile geopolitical and policy environment, Nvidia’s agility, scale, and innovation remain its greatest strengths.