Nvidia has reported strong earnings for the first quarter of its fiscal year 2026, closing April 28, 2025, but also delivered a cautious outlook due to new US export restrictions on its AI chips. The semiconductor giant beat revenue expectations with $44.06 billion in sales (up 69% from the previous year), driven primarily by a booming data center segment that grew 73% to $39.1 billion. This growth was especially attributed to heavy demand for the company’s AI chips.
However, despite this strong performance, Nvidia revealed that it faced a significant financial setback due to US trade rules aimed at curbing technology exports to China. Specifically, the company incurred a $4.5 billion charge in the quarter related to inventory for its H20 AI chip, which now requires an export license to be sold in China. Additionally, Nvidia said it lost $2.5 billion in potential sales during the quarter due to these restrictions. Notably, the Jensen Huang-led company had predicted a $5.5 billion revenue loss for Q1.
For the next quarter, the company expects the revenue hit from export restrictions to continue, estimating a loss of about $8 billion. As a result, the company anticipates around $45 billion in sales next quarter, which is less than the $45.9 billion analysts were expecting. According to CEO Jensen Huang, the new rules requiring special licenses have basically stopped Nvidia from selling its Hopper data center chips in China. He noted that because of this, the $50 billion AI chip market in China is effectively closed to US companies. The latest US export curbs (announced on April 9, 2025) become more significant as the Chinese market alone contributed around $17 billion (around 13% of the company’s total revenue) in the previous fiscal year.
But despite such challenges, the company’s overall business showed strong momentum. Its gaming division (which used to be its primary business before moving into AI) grew 42% year-over-year to $3.8 billion, supported by chips powering devices like the new Nintendo Switch and AI applications. The automotive and robotics segment also experienced a 72% increase in sales (reaching $567 million), driven by chips and software for self-driving technology. Meanwhile, the professional visualization business grew 19% to $509 million. This vertical includes chips for 3D design, recently released DGX Spark and DGX Station desktops for AI.
The firm’s profit margin dropped to 61% this quarter because of charges related to China, down from an expected 71.3%. At the same time, net income increased by 26% to $18.8 billion (or 76 cents per share), compared to $14.9 billion a year ago. The company also bought back $14.1 billion of its own shares and paid $244 million in dividends.
Nvidia’s recent earnings report comes at a time when the company is reportedly preparing to introduce a simpler and more affordable version of its Blackwell AI chip ( potentially called the B20), particularly for the Chinese market. This new chip is designed to use less power and include fewer advanced features, allowing it to comply with strict US trade regulations. To bring the B20 chip to market, Nvidia plans to partner with Inspur, one of China’s largest server manufacturers. Earlier in April 2025, Nvidia CEO Jensen Huang visited Beijing to discuss the current situation with Chinese clients and to present new chip designs customized for the country.
