Nvidia's stocks surge following robust Q1 earnings, amidst obstacles from export control regulations.
Tech giant Nvidia reported a robust first-quarter earnings performance on Wednesday, exceeding analyst estimates, but cautioned about second-quarter sales due to tightening export controls to China that affect its AI chips.
In the artificial intelligence (AI) sector, where Nvidia holds a leading position, shares rose 3% in after-hours trading following the announcement. The earnings report revealed a 26% year-over-year increase in net income, which reached nearly $19 billion, with revenue surging 69% to $44 billion.
Revenue from data centers was $39 billion in the first quarter, marking a 10% increase from the previous quarter and a 73% year-over-year growth. Nvidia is also investing heavily in the U.S., with plans to build factories and produce AI supercomputers domestically in partnership with other companies.
"Our breakthrough Blackwell NVL72 AI supercomputer - a 'thinking machine' designed for reasoning - is now in full-scale production across system makers and cloud service providers," said Nvidia CEO Jensen Huang.
Amid the strong global demand for Nvidia's AI infrastructure, Huang stated that AI inference token generation has surged tenfold in just one year. As AI agents become mainstream, the demand for AI computing is predicted to accelerate further.
Huang emphasized that countries worldwide are recognizing AI as essential infrastructure similar to electricity and the internet, and Nvidia stands at the center of this large-scale transformation.
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However, the U.S. government recently issued new export controls requiring a license for Nvidia's advanced AI products destined for China. On April 9, the company learned it needed such a license for its H20 AI chips. As a result, Nvidia incurred a $4.5 billion charge in the first quarter of fiscal 2026 associated with H20 excess inventory and purchase obligations due to reduced demand in China.
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Despite these challenges, Nvidia anticipates missing $8 billion in sales in the second quarter due to the export restrictions. Nevertheless, the company's overall financial performance remains solid, with a 12% quarterly revenue increase and sustained demand for AI technology worldwide.
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Reuters contributed to this report.
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| Ticker | Security | Last | Change | Change % ||--------|---------------------|------|---------|----------|| NVDA | NVIDIA CORP. | 134.81 | -0.69 | -0.51% || Powered By | | | | |
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As a result of the new export licensing requirements, Nvidia will shift its focus towards domestic production, investing an estimated $500 billion over the next four years to develop AI infrastructure and supercomputers within the U.S.
[Enrichment Data: Nvidia's strategic $500 billion investment in the U.S. aims to bolster American AI capabilities and chipmaking on a significant scale. The company faces export challenges with the U.S. government's restrictions on advanced AI products destined for China, causing a substantial $4.5 billion charge due to reduced demand.]
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- The strong demand for Nvidia's AI infrastructure, as recognized globally, has resulted in a surge of AI inference token generation, tenfold in just one year.
- As a consequence of the new export licensing requirements, Nvidia is planning to invest an estimated $500 billion over the next four years to bolster American AI capabilities and chipmaking on a significant scale, with a shift towards domestic production.
- The earnings report showed a significant rise in revenue, with a 69% year-over-year surge to $44 billion, demonstrating the robust state of the company's trading and finance.
- The tightening export controls to China have led Nvidia to incur a $4.5 billion charge in the first quarter of fiscal 2026, associated with H20 excess inventory and purchase obligations due to reduced demand in China. This highlights the potential impact of economic and market regulations on the technology sector, particularly in the AI realm.
