Nvidia Flags Rising China Risks Despite Record Sales Growth
Nvidia reported a stellar 69% year-over-year sales growth in its latest earnings report, yet the AI chipmaker issued new warnings about rising risks related to the ongoing U.S.-China tech conflict. For the first time, the company cited U.S. restrictions on Chinese open-source AI models like DeepSeek and Qwen, as well as curbs on connected vehicle technology, as potential threats to its business.
While Nvidia’s long-struggling car chip business has recently flourished in China, new U.S. export rules threaten those gains. CEO Jensen Huang acknowledged these concerns, noting in a regulatory filing that while a Trump-era export rule was recently rescinded, no replacement has been issued yet. The company cautioned that any future rule could bring new limitations.
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$10.5 Billion Sales Hit from Export Curbs
Huang expressed frustration over new export restrictions imposed in April, which bar Nvidia from selling its H20 chip to the Chinese market. The restrictions resulted in a $2.5 billion loss in Q1 sales and are expected to cause another $8 billion hit in Q2. Before the ban, the H20 chip generated $4.6 billion as customers stockpiled inventory. China accounted for 12.5% of Nvidia’s total revenue.
Despite tensions, Huang argued that keeping Chinese models running on Nvidia infrastructure benefits U.S. firms by offering visibility into global AI trends. “America wins when models like DeepSeek and Qwen run best on American infrastructure,” he said.
Strong Outlook and Praise for Trump Policies
Nvidia forecasts $45 billion in Q2 sales, up 50% year-over-year, and highlighted major deals in Saudi Arabia, UAE, and Taiwan. Huang praised former President Trump for policies that promote U.S. tech leadership, including AI-led reshoring of factories. “We share this vision,” he said, referring to robot-staffed U.S. manufacturing plants.
