Nvidia takes $4.5 billion impairment charge due to H20 chip inventory.

Nvidia takes $4.5 billion impairment charge due to H20 chip inventory.

Nvidia Corp. (NVDA) is set to report its quarterly earnings on Wednesday, with investors closely monitoring the impact of U.S. export restrictions on its China business. The company has announced a significant impairment charge of $4.5 billion due to the H20 chip inventory, which is expected to weigh on its financial results [1].

The H20 chip, a version of Nvidia's Hopper processor designed for the Chinese market, has been subject to U.S. export licensing requirements since April 9, 2025. These restrictions have led to a substantial write-down in inventory, with analysts calling it the biggest writedown in the history of the chip industry [1].

Despite the impairment charge, Nvidia's revenue growth remains high relative to other tech megacaps. For the quarter ended in April, analysts expect Nvidia to report 66% revenue growth to $43.28 billion [1]. However, this growth marks a sharp deceleration from a year ago when the company recorded growth of over 250% [1].

The uncertainty surrounding the impact of the export restrictions on future revenue is significant. The average analyst estimate predicts growth in the current quarter of 53%, with similar growth expected for the full fiscal year [1]. Morgan Stanley analysts have noted that Nvidia faces a bigger hit than expected, with the company being materially surprised by the new restrictions [1].

Nvidia's shares have bounced back after a rough start to the year, with the stock up about 1% in 2025, while the Nasdaq is down about 1% [1]. The company is expected to face challenges in China but has identified new opportunities in the Middle East and renewed AI investment from cloud providers [3].

References:
[1] https://www.cnbc.com/2025/05/27/nvidia-nvda-preview-china-chip-curbs.html
[2] https://www.stocktitan.net/news/NVDA/nvidia-announces-financial-results-for-first-quarter-fdce42nx73x8.html
[3] https://timesofindia.indiatimes.com/business/international-business/nvidia-shares-rise-ahead-of-earnings-as-investors-eye-impact-of-us-chip-curbs-on-china/articleshow/121444094.cms