Nvidia Preview: $15B China Setback Looms

Three months ago, Nvidia stunned the market with $39.33 billion in quarterly revenue and a 77.9% year-over-year growth, reaffirming its undisputed dominance in the industry. But today, the landscape is far more nuanced. Investor confidence has wavered again, and Nvidia must now prove itself once more through its earnings tonight. Can it meet the market's high expectations again?

For this quarter, analysts expect Nvidia to report revenue of $43.37 billion, up 66.5% year-over-year—still leagues ahead of peers. However, this is a notable slowdown from the 262% revenue growth in the same quarter last year. Adjusted net profit is expected to hit $21.13 billion (or $0.86 per share), up from $15.24 billion ($0.61 per share) a year ago.

Thanks to massive investments from tech giants like Meta, Alphabet, Apple, Amazon, and Microsoft in AI infrastructure, Nvidia’s data center segment is expected to see over 8% sequential growth.

Overall, Wall Street remains optimistic about Nvidia’s earnings. But for analysts, the most crucial factor this time isn’t just the numbers—it’s China.

China, China, and Still China

On April 9, the Trump administration sent a letter to Nvidia, requiring it to reapply for an export license for its H20 chips—previously deemed compliant under U.S. regulations. Following this new mandate, Nvidia announced a $5.5 billion inventory writedown. Analysts described it as the largest in semiconductor history, warning of severe impacts on the company’s future earnings.

As a result, much attention has turned to understanding how this new restriction will shape Nvidia’s business outlook.

BNP Paribas analyst David O'Connor wrote, "This writedown signals a potential $15 billion revenue loss for Nvidia from the H20 chip over the next 12 months."

CEO Jensen Huang recently said in an interview that the new regulation caused "deep pain," forcing the company to forgo $15 billion in revenue and $3 billion in taxes. Earlier this month, Huang emphasized that China’s AI market could reach $50 billion in the coming years—missing out would be a “massive loss.”

A Sudden Blow

Morgan Stanley analysts noted the license revocation delivered a larger-than-expected shock. “While Nvidia had anticipated some restrictions, the final result was a major surprise,” they said, hinting the company had previously been led to believe approval was likely.

Hightower’s Stephanie Link also warned: “This could make tonight’s earnings report look terrible.” SEC filings from February show Nvidia’s annual sales to China (including Hong Kong) total \$17.1 billion, making it the company’s fourth-largest market. However, CEO Huang confirmed earlier this month that Nvidia’s GPU market share in China has plunged from 95% to 50%.

Limited But Lingering Impact?

Oppenheimer analysts argue the impact of export controls may be limited. “While Nvidia has lost some H20 sales, we still see upside potential,” they stated. Though China remains a key market, it now accounts for just 5% of Nvidia’s total revenue.

Cantor Fitzgerald’s C.J. Muse believes skepticism about Nvidia’s position in China could make tonight’s report a "capitulation moment" for bearish sentiment. Nvidia, in turn, could seize the opportunity to highlight upcoming Blackwell-series momentum in the second half of the year. Data center demand, Muse notes, remains "insatiable," and Blackwell’s performance will likely sustain that demand.

Analysts Remain Bullish

Despite divided forecasts, analysts broadly remain upbeat. Bank of America reiterated its “Buy” rating, citing Nvidia’s unique advantage in the global AI deployment cycle and the likelihood that upcoming compliant products could revive China sales. They set a target price of \$160, implying an 18% upside.

Morgan Stanley also named Nvidia its “top pick” in semiconductors, noting that tonight’s results will show significantly improved GB200 shipments in April, although export restrictions will weigh on current-quarter revenue. They also recommend short-term caution, but gave Nvidia an “Overweight” rating with a \$160 target—also an 18% potential gain.

Jefferies analyst Blayne Curtis and his team wrote Friday that Nvidia’s stock has “climbed steadily in recent weeks,” reflecting easing trade tensions and AI chip optimism, despite ongoing restrictions. Supply chain checks show the GB200 (Blackwell line) may be underestimated, hinting that ramp-up momentum is underway. They cut July and August revenue forecasts from $47.5B/$52.8B to $45.3B/$51.1B, but expect Blackwell’s growth to offset investor concerns about network segment losses.