Nvidia's Q1 Revenue Surges 2.3% Despite U.S. Export Restrictions

Nvidia, a leading technology company, reported its first-quarter earnings for the fiscal year 2026, which ended on April 27. Despite facing pressure from U.S. government export restrictions, the company's overall performance exceeded market expectations. The total revenue for the quarter reached 441 billion, surpassing the market's forecast of 431 billion. The net profit stood at 187.75 billion, slightly below the expected 207.67 billion, while the adjusted earnings per share were 0.96 dollars, meeting the market's expectation of 0.93 dollars.

The data center business, a critical segment for Nvidia, saw a 73% year-over-year increase in revenue, totaling 391 billion. This growth, although impressive, was slightly below the market's projection of 393 billion. The company's strong performance in this sector was a significant contributor to its overall positive results for the quarter.

One of the key concerns for investors was the potential impact of U.S. trade restrictions on China, which could hinder Nvidia's long-term growth. In April, the U.S. government imposed a substantial ban on the export of the H20 chip to China, leading Nvidia to record a 55 billion asset impairment. The company further disclosed that the excess inventory of H20 chips resulted in a 45 billion loss for the first quarter, with an additional 25 billion in potential sales lost due to the restrictions.

Looking ahead, Nvidia anticipates second-quarter revenue to be around 450 billion, with a potential variance of 2%. This projection is lower than the market's expectation of 459 billion. The company attributes this discrepancy to the recent export restrictions on the H20 chips, which are expected to result in an 80 billion revenue loss for the second quarter. Additionally, Nvidia forecasts its operating expenses for the second quarter to be approximately 57 billion, a significant increase from the previous quarter's 36 billion and the year-ago period's 39 billion.

Despite the challenges posed by trade restrictions and regulatory uncertainties, Nvidia's CEO, Jensen Huang, emphasized the strong global demand for the company's AI infrastructure. He highlighted that China, one of the world's largest AI markets, is crucial for Nvidia's global success. Huang noted that the U.S. government's export ban has effectively closed the company's Hopper data center business in China, but he remains optimistic about the region's potential.

Huang also addressed the misconception that China cannot develop its own AI chips, stating that this assumption is flawed. He emphasized that the real concern is whether the world's largest AI market will operate on U.S. platforms. Nvidia's strategic focus on innovation and adapting to market changes has enabled the company to navigate through these challenges and maintain its leadership position in the technology industry.