Nvidia Posts Solid Sales Outlook Despite China Hit

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Nvidia Corp. Chief Executive Officer Jensen Huang soothed investor fears about a China slowdown by delivering a solid sales forecast, saying that the AI computing market is still poised for “exponential growth.”  The company expects revenue of about $45 billion in the second fiscal quarter, which runs through July. New export restrictions will cost Nvidia about $8 billion in Chinese revenue during the period, but the forecast still met analysts’ estimates. That helped propel the shares about 5.4% in premarket trading on Thursday. The outlook shows that Nvidia is ramping up production of Blackwell, its latest semiconductor design. The chipmaker — now the world’s largest by revenue and market value — dominates the field of AI accelerators, the components that help develop and run artificial intelligence models. And an ever-broader lineup of hardware and software is letting Nvidia sell more products to customers.  As part of that push, the company is offering its chips as part of whole computer systems — a move it says is necessary to speed up the deployment of more complex and powerful technology. Nvidia expects AI infrastructure to eventually transform economies around the world.  “Every nation now sees AI as core to the next industrial revolution — a new industry that produces intelligence and essential infrastructure for every economy,” Huang said on a conference call with analysts. Nvidia shares closed at $134.81 in New York on Wednesday, leaving the stock little changed in 2025. Sales in the first quarter, which ended April 27, rose 69% to $44.1 billion. That compared with an average estimate of $43.3 billion. That growth would be enviable for most chipmakers, though it was the smallest percentage gain in two years. Profit was 96 cents a share, minus certain items. Wall Street was looking for 93 cents. The data center unit, a division that’s larger by itself than all of Nvidia’s nearest rivals combined, had sales of $39.1 billion. That was just shy of the average estimate of $39.2 billion. Gaming-related sales — once Nvidia’s main business — were $3.8 billion. Analysts projected $2.85 billion on average. Automotive was $567 million. One lingering question is whether US trade restrictions on China will hinder Nvidia’s long-term growth. In April, the Trump administration placed new curbs on exports of data center processors to Chinese customers, effectively shutting Nvidia out of the market. The chipmaker said on Wednesday that it incurred a $4.5 billion writedown because of the issue. “The broader concern is that trade tensions and potential tariff impacts on data center expansion could create headwinds for AI chip demand in upcoming quarters,” Emarketer analyst Jacob Bourne said in a note. Nvidia also disclosed that it’s facing scrutiny inside China, where regulators have demanded that it keep supplying local companies in return for regulatory approval of its acquisition of Mellanox. The company warned that it may face penalties in that case. Nvidia completed the purchase of Mellanox, a maker of networking technology, in 2020.  “Regulators in China are investigating whether complying with applicable US export controls discriminates unfairly against customers in the China market,” it said in a filing. “If regulators conclude that we have failed to fulfill such commitments or we have violated any applicable law in China, we could be subject to financial penalties, restrictions on our ability to conduct our business.” On the call with analysts, Huang was asked whether the company will produce a new chip that will let it resume shipping to China. It had earlier created the less-powerful H20 product for that purpose, tailoring it to meet previous US rules. But stricter curbs now limit its sale in the country. Huang said that Nvidia couldn’t reduce the capabilities of the H20 further and still field a product that was useful. However, the company is pondering whether it can come up with something “interesting” for the market. -------- Watch Bloomberg Radio LIVE on YouTube Weekdays 7am-6pm ET WATCH HERE: http://bit.ly/3vTiACF Follow us on X: https://twitter.com/BloombergRadio Subscribe to our Podcasts: Bloomberg Daybreak: http://bit.ly/3DWYoAN Bloomberg Surveillance: http://bit.ly/3OPtReI Bloomberg Intelligence: http://bit.ly/3YrBfOi Balance of Power: http://bit.ly/3OO8eLC Bloomberg Businessweek: http://bit.ly/3IPl60i Listen on Apple CarPlay and Android Auto with the Bloomberg Business app: Apple CarPlay: https://apple.co/486mghI Android Auto: https://bit.ly/49benZy Visit our YouTube channels: Bloomberg Podcasts: https://www.youtube.com/bloombergpodcasts Bloomberg Television: https://www.youtube.com/@markets Bloomberg Originals: https://www.youtube.com/bloomberg Quicktake: https://www.youtube.com/@BloombergQuicktake