Nvidia beats Wall Street forecasts despite $4.5B hit from U.S. export curbs, with strong AI demand driving $44.1B in revenue and $18.8B in profit.
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| Chip giant Nvidia surpasses expectations amid geopolitical tension, posting $18.8B profit as global AI demand remains strong despite China restrictions. Image: CH |
SANTA CLARA, USA — May 29, 2025:
Nvidia, the world’s leading AI chipmaker, posted blockbuster quarterly earnings on Wednesday, surpassing analyst expectations despite a $4.5 billion charge linked to U.S. export controls on its AI hardware destined for China.
The company reported $44.1 billion in revenue and $18.8 billion in profit, pushing shares up over 4% in after-hours trading. Though the export hit was smaller than anticipated, Chief Financial Officer Colette Kress warned on an earnings call that upcoming quarter losses could reach $8 billion under the same U.S. restrictions.
In April, Nvidia had informed regulators of an estimated $5.5 billion impact in the recently ended quarter due to licensing hurdles for its H20 chip—designed to meet previous U.S. export limits but now subject to even tighter scrutiny. The U.S. government requires special licenses for the export of these high-bandwidth GPUs over concerns they could power Chinese supercomputing efforts.
“China is one of the world's largest AI markets and a springboard to global success,” said CEO Jensen Huang. “However, the $50 billion China market is effectively closed to us.”
Huang emphasized that Nvidia has exhausted its options to comply with U.S. policy. “We cannot further dial back the H20's capabilities,” he said, adding that the company was forced to write off billions in unsellable inventory.
Huang also challenged Washington’s assumption that China would be unable to produce high-end AI chips. “That assumption was always questionable and now it's clearly wrong,” he said, noting that China’s domestic AI sector is advancing rapidly.
The export ban led to a $4.5 billion inventory-related charge and blocked an additional $2.5 billion in potential revenue during the quarter, Nvidia said in its Securities and Exchange Commission (SEC) filing.
Still, Nvidia’s data center segment generated $39.1 billion in revenue, up 10% year-over-year. Demand for the company’s AI-centric GPUs remains red-hot as global tech firms race to build infrastructure for artificial intelligence.
The firm also highlighted the rollout of its new Blackwell NVL72 AI supercomputer, described as a “thinking machine,” now in full-scale production. Huang compared AI infrastructure to electricity and the internet, stating, “Nvidia stands at the center of this profound transformation.”
Meanwhile, the gaming division hit a record $3.8 billion in revenue, surging 48% from the previous year and beating market forecasts.
Despite the upbeat earnings, analysts noted rising challenges. “Nvidia beat expectations again, but maintaining this dominance is becoming more challenging,” said Jacob Bourne of Emarketer. “Geopolitical headwinds and rising competition from AMD are pressing concerns.”
Analysts also pointed to risks from China’s AI advances, especially after DeepSeek's R1 chatbot made waves by rivaling U.S. models at a fraction of the cost.
“Trade tensions and potential tariffs on data center components could pose headwinds for Nvidia’s AI chip sales in coming quarters,” Bourne cautioned.
Even as geopolitical friction threatens Nvidia's China market, its dominance in AI and strong demand across global markets continue to power its performance.