All eyes on China restrictions as Nvidia will get set to file effects

Nvidia continues to peer large expansion from gross sales of graphics processors, with call for for synthetic intelligence infrastructure appearing no indicators of cooling.

But for the AI chipmaker, the temper is other heading into Wednesday’s income file than it is been in fresh quarters. There’s one giant explanation why: China.

On April 9, the Trump management despatched Nvidia a letter, and stated it was once requiring an export license for the corporate’s H20 chip, a model of its Hopper processor specifically designed for the Chinese marketplace to conform to earlier U.S. restrictions.

Dating again to President Biden’s time period, the U.S. govt has been involved that AI chips from Nvidia and different semiconductor corporations like Advanced Micro Devices can be utilized to create supercomputers for adversaries’ army functions.

Following the brand new restrictions, Nvidia stated it could take a $5.5 billion writedown on stock. Analysts known as it the most important writedown within the historical past of the chip trade. The attainable have an effect on on long run income is hefty.

“This inventory write-off implies a $15 billion H20 revenue hit on a rolling 12-month basis,” wrote David O’Connor, an analyst at BNP Paribas, in a file on Tuesday.

For the quarter resulted in April, analysts be expecting Nvidia to file 66% income expansion to $43.28 billion, in line with LSEG. While that stage of expansion is far upper than the type of enlargement at any of Nvidia’s megacap friends, it marks a pointy deceleration from a 12 months in the past, when the corporate recorded expansion of over 250%.

Because of the brand new export license necessities, there is a large number of uncertainty surrounding projections for the remainder of the 12 months. The moderate analyst estimate is predicting expansion within the present quarter of 53%, with equivalent a host anticipated for the whole fiscal 12 months, which leads to January.

Morgan Stanley analysts wrote in a file on Tuesday that Nvidia faces a larger hit than anticipated.

“While our thinking at the time was that this was at least partly expected by the management team, it became clear after the ban that the company had been getting indications that H20 would be OK, and that they were materially surprised,” the analysts wrote.

Nvidia stocks have bounced again of past due after a coarse begin to the 12 months and are actually up about 1% in 2025, whilst the Nasdaq is down about 1%.

Earlier this month, Huang stated in Taiwan that Nvidia used to have a 95% marketplace proportion of GPUs in China, however it is been minimize to 50% beneath chip restrictions. In a submitting with the SEC in February, Nvidia stated it recorded $17.1 billion in annual gross sales to consumers that had an deal with in China, together with Hong Kong, the corporate’s fourth-largest marketplace.

Huang has argued in fresh weeks that limiting the export of Nvidia’s chips to China will simplest encourage engineers there to get a hold of their very own processors, bolstering the rustic’s AI semiconductor ecosystem and additional threatening U.S. technological management.

Nvidia were given some excellent regulatory information in May, when the Trump management introduced it was once rescinding the “AI diffusion rule,” which entailed much more restrictions on exporting AI chips to China and different international locations. Nvidia and AMD hostile the limitations.

However, the Trump management did not completely again clear of regulating Nvidia’s exports, announcing on the time that it was once making plans a brand new, more practical substitute for the diffusion rule.

Morgan Stanley analysts be expecting questions to stay about Nvidia’s substitute H20 and its plans for China smartly after this week’s income file. They famous that Nvidia is lobbying for licenses to send the H20, which may also be granted beneath the present gadget.

“There is a conversation to be had about what will eventually be allowed in China — but probably not on this earnings call,” they wrote.

WATCH: Expect Nvidia’s steerage to be ‘higher than feared’