"Outlook" Nvidia's financial report is about to be released, what is the impact of the U.S. restrictions on chip exports to China?
Nvidia is about to release its financial report, and investors are concerned about the impact of U.S. export restrictions on chip sales to China on the company's performance. The Trump administration imposed export restrictions on Nvidia's H20 chip, which is expected to result in a $5.5 billion charge. Nvidia's CEO stated that the company has abandoned $15 billion in sales to China. Analysts pointed out that the uncertainty in the Chinese market could be the biggest factor affecting Nvidia's performance this quarter, with expected quarterly losses ranging from $3 billion to $4.5 billion
"Outlook" Nvidia's earnings report is imminent, what is the impact of U.S. chip export restrictions on China?
Reuters, May 27 - When Nvidia (HuiDa/NVIDIA) NVDA.O releases its earnings report on Wednesday, investors will be looking for clear answers on how much the U.S. restrictions on chip exports to China will cost the company, although the easing of other regulations is expected to open new markets.
To prevent the Chinese government from obtaining cutting-edge technology, the Trump administration imposed export restrictions on Nvidia's H20 chip last month - the company stated that this move would result in a $5.5 billion charge.
Nvidia CEO Jensen Huang stated last week that the company has given up $15 billion in sales in China following the implementation of the restrictions. Huang had previously estimated that the market size for artificial intelligence chips in China would be about $50 billion next year.
Nvidia has not disclosed the sales figures for the H20 chip, which is the only AI chip the company is allowed to sell to China, and last year the Chinese market accounted for 13% of its revenue.
Wedbush analysts stated before the earnings report: "The primary question regarding performance and guidance is whether Nvidia can increase sales to offset losses from the H20 chip or its business in China."
Despite reports that the company is planning to launch a new AI chip set based on Nvidia's latest Blackwell architecture for the Chinese market, the uncertainty related to losing the Chinese business has led to a decline in its stock price.
"China may be the biggest factor affecting Nvidia's performance this quarter," said Gil Luria, an analyst at D.A. Davidson.
According to data compiled by the London Stock Exchange Group (LSEG), the company's first-quarter revenue is expected to grow by 66.2% to $43.28 billion.
Susquehanna analysts estimate that these restrictions affected the last three weeks of the April fiscal quarter, causing Nvidia to lose about $1 billion in sales.
They stated that in the second half of this year, the quarterly revenue loss could reach up to $4.5 billion. Wedbush estimates the quarterly loss to be between $3 billion and $4 billion.
The adjusted gross margin is expected to decline by 11 percentage points to 67.7%. Wedbush stated that the impact of the charge related to H20 shipments on the gross margin could be as high as 12.5%.
Jensen Huang stated on Wednesday that U.S. export controls on Chinese AI chips are a failure, claiming that these measures will only encourage Chinese competitors like Huawei to accelerate the development of domestic chips
