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Nvidia earnings to reveal hit from US export curbs on China

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Reuters 28/05/2025 | 04:35 MYT
Nvidia earnings to reveal hit from US export curbs on China
US chip export limits to China hit Nvidia’s sales hard, but new deals in Gulf states and strong AI demand offer future growth paths. - REUTERS
TAIPEI: Nvidia investors will look for definitive answers on how much U.S. chip curbs on China will cost the company when it reports results on Wednesday (May 28), even as a pullback in other regulations is expected to open up new markets.

AI Brief
  • US export restrictions on Nvidia's H20 AI chip forced the company to forgo US$15 bil in China sales, hurting its stock and growth outlook.
  • Nvidia plans to expand into new markets like the Middle East, including a major deal with Saudi Arabia, despite small near-term returns.
  • While AI chip demand remains strong, Nvidia's explosive revenue beats may slow as market costs rise and China uncertainty persists.

In a fresh effort to stymie Beijing's access to cutting-edge technology, the Trump administration last month put export limits on Nvidia's H20 chip - a move the company said would result in $5.5 billion in charges.
CEO Jensen Huang, who pegged the market for AI chips in China at roughly $50 billion next year, said last week Nvidia had walked away from $15 billion of sales in the country after the curbs.
Nvidia does not break out sales for the H20, the only AI chip it was allowed to sell to China, a market which accounted for 13% of its revenue last year.
"The big question for tomorrow is what type of dent has the Trump H20/China business played in Nvidia's global demand and outlook going forward," Wedbush analysts wrote ahead of the earnings report.
While sources have told Reuters that the company is planning to launch a new AI chipset for China based on Nvidia's latest generation Blackwell architecture, the uncertainty of losing its China business has dented its stock.
The stock has already been under pressure from concerns about mounting AI infrastructure costs. It was down 2% this year, a far cry from their nearly three-fold gain last year.
The company is expected to report that first-quarter revenue surged 66.2% to $43.28 billion, according to data compiled by LSEG.
Nvidia CEO Huang recently called U.S. semiconductor curbs on China "a failure," saying they have only pushed Chinese rivals such as Huawei to speed up development of homegrown chips.
NEW REGIONS
Washington, however, has said it is going to modify a Biden-era export curb called the AI diffusion rule that sought to curb exports of sophisticated AI chips by dividing the world into three tiers, with China blocked entirely.
This easing could open up new geographies of growth for Nvidia including the Middle East, though analysts say the region's revenue contribution in the near term will be small.
As part of U.S. President Donald Trump's trade deals with some Gulf countries, Nvidia has said it would sell hundreds of thousands of AI chips to Saudi Arabia, including 18,000 of its latest "Blackwell" chips to a startup owned by the country's sovereign wealth fund.
After months of worries that investment in AI from large cloud providers was stalling, Nvidia investors have found confidence in pledges from companies including Alphabet's Google to keep spending.
Still, the quarters of blowout beats may be over for the company. In its last fiscal year, Nvidia beat Wall Street's quarterly revenue estimates by 4.9% on average. It delivered quarterly sales that were 12.5% above estimates in the fiscal year preceding that.
#US-China #NVIDIA #Donald Trump #AI chip #Middle East #English News