Nvidia earnings beat expectations despite US export controls
China export restrictions underscored immediate geopolitical pressure, while Nvidia also faced rising competition as rivals like AMD gained ground. (EPA Images pic)
NEW YORK : Nvidia on Wednesday reported earnings that topped market expectations, with a US$4.5 billion hit from US export controls being less than the Silicon Valley chip juggernaut had feared.
However, Nvidia CFO Colette Kress warned in an earnings call that export constraints are expected to cost the AI chip titan about US$8 billion in the current quarter.
Nvidia in April notified regulators that it expected a US$5.5 billion hit in the recently-ended quarter due to a new US licensing requirement on the primary chip it can legally sell in China.
US officials had told Nvidia it must obtain licenses to export its H20 chips to China because of concerns they may be used in supercomputers there, the company said in a Securities and Exchange Commission filing.
The new licensing rule applies to Nvidia graphics processing units, or GPUs, with bandwidth similar to that of the H20.
'China is one of the world's largest AI markets and a springboard to global success,' Nvidia chief executive Jensen Huang said in an earnings call.
'The platform that wins China is positioned to lead globally; however, the US$50 billion China market is effectively closed to us.'
Nvidia cannot dial back the capabilities of its H20 chips any further to comply with US export constraints, winding up forced to write off billions of dollars on inventory that can't be sold or repurposed, according to Huang.
'The US has based its policy on the assumption that China cannot make AI chips,' Huang said.
'That assumption was always questionable, and now it's clearly wrong.'
China's AI is moving on without Nvidia technology, while that country's chip-makers innovate products and ramp up operations, according to Huang.
'The question is not whether China will have AI; it already does,' he said.
'The question is whether one of the world's largest markets will run on American platforms.'
The new requirements resulted in Nvidia incurring a charge of US$4.5 billion in the quarter, associated with H20 excess inventory and purchase obligations 'as demand for H20 diminished,' the chip-maker said in an earnings report.
US export constraints stopped Nvidia from bringing in an additional US$2.5 billion worth of H20 revenue in the quarter, according to the company.
Nvidia said it made a profit of US$18.8 billion on revenue of US$44.1 billion, causing shares to rise more than 4% in after-market trades.
Huang said demand for the company's AI-powering technology remains strong, and a new Blackwell NVL72 AI supercomputer referred to as a 'thinking machine' is in full-scale production.
'Countries around the world are recognising AI as essential infrastructure – just like electricity and the internet – and Nvidia stands at the centre of this profound transformation,' Huang said.
Nvidia high-end GPUs are in hot demand from tech giants building data centres to power artificial intelligence.
The company said its data centre division revenue in the quarter was US$39.1 billion, up 10% from the same period last year.
The market had expected more from the unit, however.
'Nvidia beat expectations again but in a market where maintaining this dominance is becoming more challenging,' said Emarketer analyst Jacob Bourne.
'The China export restrictions underscore the immediate pressure from geopolitical headwinds but Nvidia also faces mounting competitive pressure as rivals like AMD gain ground,' said Emarketer analyst Jacob Bourne.
Revenue in Nvidia's gaming chip business hit a record high of US$3.8 billion, leaping 48% and eclipsing forecasts.
The AI boom has propelled Nvidia's stock price, which has regained much of the ground lost in a steep sell-off in January triggered by the sudden success of DeepSeek.
China's DeepSeek unveiled its R1 chatbot, which it claims can match the capacity of top US AI products for a fraction of their costs.
'The broader concern is that trade tensions and potential tariff impacts on data center expansion could create headwinds for AI chip demand in upcoming quarters,' analyst Bourne said of Nvidia.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
41 minutes ago
- Free Malaysia Today
Volkswagen flags ‘massive' US investments and says tariff talks constructive
German carmakers, including Volkswagen, were in talks with Washington over a possible import tariff deal. (EPA Images pic) BERLIN : Volkswagen wants to make more big investments in the US, CEO Oliver Blume said in an interview with a German newspaper today, adding that tariff talks with the US government were 'fair' and 'constructive'. Several foreign companies have announced US investments in response to President Donald Trump's import tariffs, but German carmakers have been more cautious about committing more resources to what is their biggest export market. Volkswagen's Audi brand, which has no production in the US, is planning to produce some models there, although the brand has said that the plan pre-dates the Trump administration. 'So far, we have had absolutely fair, constructive discussions,' Blume told Sueddeutsche Zeitung. 'I was in Washington myself and we have been in regular dialogue ever since,' he said. Blume, who also leads Porsche AG as CEO, said Volkswagen's main contact in Washington was US commerce secretary Howard Lutnick, adding he had agreed to keep any details of the discussions confidential. Sources told Reuters earlier this week that German carmakers including Volkswagen were in talks with Washington over a possible import tariff deal, seeking to use their US investments and exports as leverage to soften any blow. Trump's trade war has cost companies more than US$34 billion in lost sales and higher costs, according to a Reuters analysis of corporate disclosures, with companies pursuing various strategies to cope. Most of the tariffs were blocked by a US trade court this week, but a federal appeals court has temporarily reinstated them to consider the Trump administration's appeal against the trade court's ruling. The 25% tariff imposed on auto imports earlier this year has not been affected by the rulings. Uncertainty worse than tariffs In a recent survey by Germany's Machinery and Equipment Manufacturers Association (VDMA), nearly three quarters of participants said uncertainty over US trade policy had a strong impact on companies' competitiveness, while just 43% said the same for the 10% tariffs slapped on goods from most US trading partners. 'The uncertainty surrounding the US tariffs is causing more problems in our sector than the tariffs themselves,' Andrew Adair, VDMA's trade policy adviser for North America, told Reuters. 'Uncertainty causes customers to delay purchasing decisions—including American companies that are motivated to purchase machinery to ramp up their local production,' Adair said. Asked what Blume was offering in the talks, which aim to reduce the 25% autos levy, he said, 'The Volkswagen Group wants to invest further in the US. We have a growth strategy'. Blume said the Volkswagen Group already employed over 20,000 people directly and over 55,000 people indirectly in the US, and highlighted a US$5.8 billion investment in US company Rivian. 'We would build on this with further, massive investments,' Blume said. Such investments should be factored into any decisions regarding tariffs, added Blume, who said he hoped Brussels and Washington would reach a broad deal for all industries. Blume declined to say when a deal with Washington could be struck, when asked about BMW CEO Oliver Zipse's assessment that tariffs would likely fall from July. 'Of course, I also want it to happen quickly. But it depends on many factors and I can't promise anything,' he said.
Malay Mail
an hour ago
- Malay Mail
Astronomers discover mysterious star emitting rare combination of X-rays and radio waves
WASHINGTON, May 31 — Astronomers have spotted a star acting unlike any other ever observed as it unleashes a curious combination of radio waves and X-rays, pegging it as an exotic member of a class of celestial objects first identified only three years ago. It is located in the Milky Way galaxy about 15,000 light-years from Earth in the direction of the constellation Scutum, flashing every 44 minutes in both radio waves and X-ray emissions. A light-year is the distance light travels in a year, 5.9 trillion miles (9.5 trillion km). The researchers said it belongs to a class of objects called 'long-period radio transients,' known for bright bursts of radio waves that appear every few minutes to several hours. This is much longer than the rapid pulses in radio waves typically detected from pulsars - a type of speedily rotating neutron star, the dense collapsed core of a massive star after its death. Pulsars appear, as viewed from Earth, to be blinking on and off on timescales of milliseconds to seconds. 'What these objects are and how they generate their unusual signals remain a mystery,' said astronomer Ziteng Wang of Curtin University in Australia, lead author of the study published this week in the journal Nature. In the new study, the researchers used data from Nasa's orbiting Chandra X-ray Observatory, the ASKAP telescope in Australia and other telescopes. While the emission of radio waves from the newly identified object is similar to the approximately 10 other known examples of this class, it is the only one sending out X-rays, according to astrophysicist and study co-author Nanda Rea of the Institute of Space Sciences in Barcelona. The researchers have some hypotheses about the nature of this star. They said it may be a magnetar, a spinning neutron star with an extreme magnetic field, or perhaps a white dwarf, a highly compact stellar ember, with a close and quick orbit around a small companion star in what is called a binary system. 'However, neither of them could explain all observational features we saw,' Wang said. Stars with up to eight times the mass of our sun appear destined to end up as a white dwarf. They eventually burn up all the hydrogen they use as fuel. Gravity then causes them to collapse and blow off their outer layers in a 'red giant' stage, eventually leaving behind a compact core roughly the diameter of Earth — the white dwarf. The observed radio waves potentially could have been generated by the interaction between the white dwarf and the hypothesized companion star, the researchers said. 'The radio brightness of the object varies a lot. We saw no radio emission from the object before November 2023. And in February 2024, we saw it became extremely bright. 'Fewer than 30 objects in the sky have ever reached such brightness in radio waves. Remarkably, at the same time, we also detected X-ray pulses from the object. We can still detect it in radio, but much fainter,' Wang said. Wang said it is thrilling to see a new type of behavior for stars. 'The X-ray detection came from NASA's Chandra space telescope. That part was a lucky break. The telescope was actually pointing at something else, but just happened to catch the source during its 'crazy' bright phase. A coincidence like that is really, really rare - like finding a needle in a haystack,' Wang said. — Reuters
Malay Mail
an hour ago
- Malay Mail
What comes next in Trump's legal battle over tariffs?
WASHINGTON, May 30 — A US federal appeals court has temporarily halted a ruling that found many of President Donald Trump's tariffs illegal, but the chance it could ultimately back the original decision looms over the White House. What is in the US Court of International Trade's original ruling—which the Trump administration is appealing—and what options does the administration have? Which tariffs were affected? The three-judge trade court ruled Wednesday that Trump overstepped his authority in imposing blanket tariffs by invoking emergency economic powers. The judgment—although temporarily halted—affected levies unveiled on April 2, which involve a 10-per cent tariff on most trading partners and higher rates on dozens of economies including China and the European Union. These higher levels are currently suspended while negotiations take place. The ruling also applies to tariffs imposed on Canada, Mexico and China over their alleged roles in allowing an influx of drugs into the United States. But it left intact sector-specific levies like those on steel, aluminum and auto imports. Why a pause? The ruling by the little-known court, which has nationwide jurisdiction over tariff and trade disputes, initially gave the White House 10 days to complete the process of unwinding the levies. But the US Court of Appeals for the Federal Circuit on Thursday granted a temporary stay 'until further notice' while the Trump administration's appeals process plays out. This means the tariffs can remain in effect for now, while a longer-term outcome is yet to be determined. National Economic Council director Kevin Hassett told Fox News the administration is 'very pleased with the ruling,' dubbing it a victory. What are Trump's alternatives? The appeals court could eventually uphold the trade court's original decision to block Trump's sweeping tariffs. The president, however, has other means to reinstate his tariff agenda, said Thibault Denamiel, a fellow at the Center for Strategic and International Studies. These include Section 122 of the Trade Act of 1974, 'which is intended to deal with a balance of payments emergency but does not require a formal investigation,' Denamiel told AFP. The authority restricts tariffs to 15 per cent and they can only last 150 days. But it is among the policy levers that Trump could pull as he seeks a 'bridge' towards more lasting actions, said KPMG chief economist Diane Swonk. Another option is Section 338 of the Trade Act of 1930, allowing the administration to impose tariffs of up to 50 per cent on countries that discriminate against the United States, Denamiel said. Does this affect trade talks? The US trade court's ruling did not remove the threat of US tariffs for Europe or end the need for negotiations, said Andrew Kenningham, chief Europe economist at Capital Economics. This is because the threat of reciprocal tariffs remains if the White House wins its appeal, he said. Trump could also turn to sector-specific means as he did in his first term or seek congressional approval for tariffs, though this is less likely, Kenningham said. It is not clear if negotiations will lose steam, Swonk added, given that the administration wants to leverage the threat of tariffs 'very aggressively.' Even if the original ruling is eventually upheld, US officials could still buy time to exert pressure on other economies including the European Union and China. What about the broader economy? The court process 'introduces greater ambiguity around the future direction of US trade policy,' especially because the appeal is ongoing, said EY chief economist Gregory Daco. 'This legal development amplifies longer-lasting uncertainty for businesses navigating cross-border supply chains,' he added in a note. US stocks closed higher Thursday, but economic fallout has already occurred in recent months with Trump's see-sawing approach to unveiling tariffs and pausing them selectively. Financial markets have been roiled by policy shifts, and shipping halts due to high tariffs bring disruptions that cannot be cleared overnight, analysts said. 'The fate of the economy remains precarious even if we avert a recession,' Swonk said on social media. — AFP
