Nvidia to report Q1 earnings as Middle East deals, export control reprieve boost stock
Nvidia (NVDA) will report its fiscal first quarter results after the bell on Wednesday in the most-anticipated earnings announcement of the season.
Nvidia stock has fluctuated wildly since the start of the year as the company has dealt with setbacks ranging from the Trump administration's ban on shipments of its H20 chips bound for China to concerns related to expected semiconductor tariffs.
But a last-minute reprieve from Washington's planned AI diffusion rule, which was put in place by the Biden administration to limit GPU sales to certain countries, and major investment announcements during Trump's visit to the Middle East have brought Nvidia's share price to $135.50 — 1% over the value at the start of the year, and up roughly 27% over the past 12 months as of Tuesday.
Nvidia's report follows the company's showing at the annual Computex Taipei tradeshow in Taiwan, where it showcased new technologies, such as its new cloud offering, which gives customers access to cloud-based versions of Nvidia's GPUs via third-party providers, including CoreWeave (CRWV) and Foxconn (2354.TW).
For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.88 on revenue of $43.3 billion, according to Bloomberg analyst consensus data. The company reported adjusted EPS of $0.61 on revenue of $26 billion in the same period last year.
Wall Street anticipates Nvidia's data center revenue to top out at $39.2 billion, up from $22.5 billion, which works out to a 74% year-over-year increase. Gaming revenue, the company's second-largest segment, is set to hit $2.8 billion, up from $2.6 billion.
Read more: How does Nvidia make money?
Analysts anticipate Nvidia's China revenue to come in at $6.2 billion, up 150% from the $2.4 billion it sold in the region in Q1 last year. The US is expected to account for $21.6 billion of the company's sales.
Nvidia, however, said it will have to write down $5.5 billion in charges related to the Trump administration's ban on sales of its H20 chip. The company announced the news in an April regulatory filing.
Nvidia specifically designed the H20 to meet the Biden administration's restrictions on AI chips destined for China. But DeepSeek sent shockwaves through Washington and Wall Street when it proved it could produce powerful AI models using below top-of-the-line Nvidia chips. As a result, Trump imposed tighter restrictions on the company's chips, banning the sale of H20s in the country.
"There is simply no offset to this," Morgan Stanley analyst Joseph Moore wrote in an investor note ahead of the earnings report.
"Blackwell demand is very strong ... but they are supply constrained, and lost H20 does not result in more Blackwell supply. We assume that this takes about $1 bn out of the April [quarter]—impact was effective April 7, so 23 days of lost H20 revenue—and about $5 bn of lost revenue in July. We actually think demand for H20 is much higher, driven by the surge of inference in China."
According to Reuters, Nvidia is now working on a modified version of the H20 that meets the Trump administration's performance requirements.
During a press conference at Computex, Nvidia CEO Jensen Huang came out swinging against the US's policies, saying that they've been a failure and that they benefit China's own AI chipmakers, according to Bloomberg.
Nvidia received relief from some export restrictions when the Trump administration axed the Biden administration's planned AI diffusion rules, which would have created a tiered system that determined which countries could purchase AI chips and which required special licenses or couldn't get them at all. The administration plans to introduce a new set of export requirements in the future.
The move set up Nvidia's announcement that it will provide hundreds of thousands of GPUs over the next five years to Humain, an artificial intelligence startup backed by Saudi Arabia's sovereign wealth fund. The news came during Trump's trip to the Middle East, which also included the announcement of a second Project Stargate that will be built in the United Arab Emirates using Nvidia's Blackwell systems.
"For investors worried about AI capex sustainability, we now have another deeppocketed customer willing and capable to spend large amounts of money on a clearly strategic push as Saudi Arabia attempts to position itself as a regional and global AI hub," Bernstein analyst Stacy Rasgon wrote in an investor note.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X/Twitter at @DanielHowley.
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