Nvidia takes $4.5bn hit as a result of export restrictions
In the course of the earnings name for its newest monetary outcomes, Nvidia revealed it has taken “a multibillion-dollar write-off” as a result of US superior semiconductor export restrictions.
The bogus intelligence (AI) chipmaker beforehand downgraded its Hopper AI accelerator for the Chinese language market to adjust to US export restrictions. Whereas president Donald Trump lately revoked the Framework for Synthetic Intelligence Diffusion from the US Bureau of Trade and Safety (BIS), which got here into drive in April, the export regulation controls on superior semiconductors materially affected Nvidia’s exports of its H20 AI accelerator to China.
Nvidia mentioned it incurred a $4.5bn cost within the first quarter of fiscal 2026 related to H20 extra stock and buy obligations because the demand for H20 diminished. It mentioned gross sales of H20 merchandise had been $4.6bn for the primary quarter of fiscal 2026 previous to the brand new export licensing necessities. It mentioned it was unable to ship an extra $2.5bn of H20 income within the first quarter.
In line with a transcript of the earnings name posted on Looking for Alpha, denying entry to the AI market in China would have a cloth impression on Nvidia’s enterprise. CFO Collette Kress famous that had the export controls not occurred, Nvidia would have had orders of about $8bn for the H20 AI accelerator {hardware}.
“Dropping entry to the China AI accelerator market, which we imagine will develop to almost $50bn, would have a cloth opposed impression on our enterprise going ahead and profit our overseas opponents in China and worldwide,” she added.
In her ready assertion, one among Kress’ remarks seems to have been aimed squarely on the US administration. She famous that the export restrictions merely spurred China on to innovate and scale its AI capabilities, including: “The query is whether or not one of many world’s largest AI markets will run on American platforms.”
For its first quarter of 2026, Nvidia posted datacentre income of $39bn, 73% greater than the identical quarter final 12 months. Jensen Huang, founder and CEO of Nvidia mentioned the corporate was experiencing “extremely robust” demand for its AI acceleration {hardware}.
“AI inference token technology has surged tenfold in only one 12 months, and as AI brokers develop into mainstream, the demand for AI computing will speed up,” he mentioned.
Evaluating the significance of AI chips to a nation’s electrical energy provide, he added: “Nations all over the world are recognising AI as important infrastructure – similar to electrical energy and the web – and Nvidia stands on the centre of this profound transformation.”
However US tariffs could curb demand, based on Forrester’s senior analyst Alvin Nguyen: “If commerce negotiations will not be resolved quickly, anticipate to see tariffs impression demand for AI infrastructure – this will not impression Nvidia instantly, however may sluggish general AI demand if uncertainty about product prices linger.”
Provided that AI chips are already costly merchandise, that are set to get dearer as tariffs take impact, Nguyen added: “The longer it takes to barter secure commerce agreements, the extra it may impression buying choices from AI infrastructure to AI factories as a result of potential value implications.”
