NVIDIA Crushes Earnings--But One $8 Billion Problem Could Haunt Its AI Future
NVIDIA (NASDAQ:NVDA) just posted another jaw-dropping quarter, with Q1 revenue hitting $44.1 billionup 69% from a year agodriven by relentless demand for AI data center chips. Its data center unit alone pulled in $39.1 billion, thanks to full-scale rollout of the new Blackwell NVL72, dubbed by CEO Jensen Huang as a thinking machine built for AI reasoning. Gaming revenue climbed to a record $3.8 billion, and NVIDIA continued planting stakes globallyfrom AI factories in Saudi Arabia and the UAE to a new quantum research hub in Japan.
Warning! GuruFocus has detected 4 Warning Signs with NVDA.
But there's a twist in the story: new U.S. export restrictions on NVIDIA's H20 AI chips to China slammed the brakes on a key revenue stream. The company recorded a $4.5 billion charge for unsold H20 inventory and missed out on another $2.5 billion in potential sales last quarter. It's bracing for an $8 billion hit this coming quarter. That said, NVIDIA still sees Q2 revenue coming in around $45 billion, and is guiding gross margins to reach into the low-70% range, even with China off the table.
Huang struck a confidentbut measuredtone, signaling that AI infrastructure is fast becoming as vital as electricity. NVIDIA's global expansion efforts and continued partnershipswith the likes of Google, Oracle, and Foxconncould cushion some of the blow from China. Still, with geopolitical risk rising and regulation tightening, this next leg of the AI cycle may get bumpy. Investors may want to watch how fast those international AI factories scaleand whether demand holds as NVIDIA navigates this new global chessboard.
This article first appeared on GuruFocus.
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