Nvidia's hit from being caught in the US-China tech war isn't as bad as expected
Nvidia missed out on $2.5 billion in additional revenue during the first quarter of this year, after the Trump administration placed fresh restrictions on exports of its H20 artificial intelligence chips to China last month.
Despite those unearned sales — revealed in the company's earnings report Wednesday — Nvidia took a smaller blow from the new H20 restrictions during the quarter than expected. It took a $4.5 billion charge in the quarter because of the export controls, although it had warned investors last month the hit might be as high as $5.5 billion.
Investors had been watching the impact of the H20 export controls because they underscore Nvidia's increasingly tenuous position at the center of an increasing US-China trade and tech war. The smaller than expected charge is likely to be viewed as a positive sign, although the company added it expects to lose out on another $8 billion in revenue during the second quarter because of the H20 controls.
Nvidia's shares rose 3.5% in after-hours trading following the report.
Nvidia last year released the H20 chip to accommodate stringent US export controls to China while maintaining access to the market, which accounted for around 13% of its sales last year. But in April, the White House told the company it would need a special license to export the H20 — which is widely believed to have contributed to the powerful Chinese AI model DeepSeek — to China. Nvidia CEO Jensen Huang has called US chip export controls a 'failure.'
But despite the uncertainty caused by the White House's trade policy, Nvidia's overall business continues to grow at a striking clip.
The chipmaker exceeded Wall Street analysts' expectations for both revenue and profits during the first quarter. It earned $44.1 billion in revenue, up 69% from the same period in the prior year. And its net income grew 26% year-over-year to $18.8 billion.
'Even during a period of industry consolidation — with growing competition and geopolitical tensions creating a more challenging macro environment — the company demonstrated its ability to focus on the right operational areas,' Thomas Monteiro, senior analyst at Investing.com, said in emailed commentary. He added that the smaller than expected impact from the H20 controls 'highlighted Nvidia's adaptability to changing market conditions.'
Given its central role building many of the chips that power AI systems, Nvidia's earnings are viewed as a barometer for the larger tech sector. Uncertainty around tariffs and trade policy, as well as tough questions from investors about returns on AI spending, have loomed over the industry.
But Nvidia CEO Jensen Huang said in a statement Wednesday that demand for the company's AI technology remains 'incredibly strong.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
31 minutes ago
- Bloomberg
China Agrees to Resume Some Seafood Imports From Japan
China agreed to allow seafood imports from Japan pending some final procedural moves, Japan's Agriculture Minister Shinjiro Koizumi said on Friday, in a step forward from Beijing's blanket ban on the shipments following Tokyo's release in 2023 of wastewater from a wrecked nuclear power plant. A ban on seafood exported from 37 prefectures will be lifted, Koizumi said at a press conference in Tokyo, although separate restrictions on products from 10 prefectures including Tokyo and Fukushima, instated after the devastating accident at the Fukushima Dai-ichi Nuclear Power Plant, are still in place.
Yahoo
33 minutes ago
- Yahoo
CIOs tackle talent strategies, org structures as AI takes hold
This story was originally published on CIO Dive. To receive daily news and insights, subscribe to our free daily CIO Dive newsletter. Cambridge, Mass. — The rapid pace of AI development is putting CIOs in a tricky spot: Not only are they responsible for deploying tools that can boost productivity, they're also working to ensure the tools can be utilized once deployed. The dynamic has made workforce upskilling efforts a priority. It's up to tech leaders to help shape a culture that enables AI experimentation, according to Monica Caldas, global CIO at Liberty Mutual Insurance. "I do not believe that AI thrives in heavily authoritarian, top-down environments," said Caldas, speaking last week at the MIT Sloan CIO Symposium. "I think the way people pick it up is through play." Along with encouraging experimentation, the risk profile of AI necessitates guardrails as businesses tackle change management. "It's not anarchy, but it's also not authoritarian," Caldas said. "You have to hit that sweet spot, and that's where adoption really starts." Other businesses are preparing their employees through targeted training programs. More than half of leaders said they plan to upskill their workforce ahead of AI implementation plans, according to a January survey from Revature. More than 4 in 5 decision-makers flagged access to talent as a top concern. Potential productivity wins can help existing staff embrace upskilling efforts, said Dimitris Bountolos, chief information and innovation officer at infrastructure company Ferrovial. "What we have seen is an excitement of staff to be self-sufficient in activities that were really bureaucratic," Bountolos said. The deployment of generative AI tools caused a rush of interest in prompt engineering roles. Interest has since fizzled, as businesses began to understand that learning to prompt generative AI systems is a core skill that should be developed more broadly. AI savviness should be embraced by the entire organization, according to Reshmi Ramachandran, head of partnerships and go to market strategy at consulting firm Cprime. "When we consult with companies we often tell them: never do prompt engineering in isolation. It's not an isolated job, it is actually a cross-functional skill," Ramachandran said. "You get some of your best prompts from marketing leaders, from HR, because that's where the context is." In addition to changes in job functions, departmental structures are also evolving. The wave of AI adoption is helping to accelerate a shift away from the established pyramid-shaped organizational structures in software development, according to Aamer Baig, senior partner, Chicago, at McKinsey & Company. "In the last decade or so, we've proven that is not the most effective and economical way of delivering software," said Baig. A diamond-shaped model with a team of somewhere between eight to 12 was identified as the most effective. But with the influx of agentic AI, that organizational structure is also changing. "Now, we have a new model, which is enabled and powered by AI, that has a product person, product builders and many, many agents to support, which can deliver as much output as a diamond-shaped team does," Baig said. In addition to serving as CIO, tech executives will need to take on additional roles including "chief influencing officer, chief change management officer" as organizations adjust to shifts in their core talent and operational structures. "The ability to move that sort of organization and that complexity forward will differentiate the winners and the losers in large companies," Baig said.
Yahoo
33 minutes ago
- Yahoo
Two of Silicon Valley's Most Prestigious Venture Capital Firms Just Plowed $135 Million Into Sam Altman's Crypto Project. What Do They See That Wall Street Doesn't?
Sam Altman of OpenAI is also the co-founder of an identity management project called World Network. World Network is looking to use biometric hardware to help combat the rise of artificial intelligence (AI) bots online. As part of the project, World Network also employs a transactional layer known as Worldcoin -- a cryptocurrency available to investors. 10 stocks we like better than Worldcoin › The first half of 2025 has been anything but predictable in the stock market. It seems like ages ago that concerns around Chinese start-up DeepSeek and the intensifying competitive landscape in artificial intelligence (AI) sent shockwaves across the capital markets. As investors know all too well, just about the only things economists have been talking about for almost two months now are tariffs. In the wake of all this uncertainty in the equity market, some astute investors have turned elsewhere. Specifically, the cryptocurrency market has started to attract some new life. Although Bitcoin seems poised to reach new all-time highs, venture capital (VC) juggernauts Andreessen Horowitz (A16Z) and Bain Capital just jointly plowed $135 million into a relatively new token called Worldcoin (CRYPTO: WLD) -- an initiative that was co-founded by Sam Altman, the chief executive officer of OpenAI. Let's explore what Worldcoin is and assess why two of Silicon Valley's most prestigious VC firms just invested in the fledgling crypto project during this period of pronounced market uncertainty. Worldcoin is a cryptocurrency token that runs on the Ethereum blockchain. It serves as the transactional foundation for a project known as World Network. To put it simply, Altman and his co-founders are seeking to build a community (the World Network) that helps solve a use case known as "proof of human." Essentially, by becoming a member of the World Network, each user is then granted a unique identifier known as their custom World ID. In an effort to combat the same user signing up twice or having the network comprised by artificial intelligence (AI) bots, World IDs are verified using a technology called iris biometrics (eye scanning). Before joining The Motley Fool, I spent a decade working in investment banking as well as leading various financial projects at technology start-ups. Anecdotally speaking, I've seen VC investors become intrigued by ideas that may come across as off the beaten path. I see World Network as no different. On the surface, World Network parallels something out of an Orwellian novel. But digging a little deeper into its purpose, I can understand the need for solving the proof of human (PoH) use case. In its initial whitepaper, World Network outlines certain functions (such as voting online) that are currently difficult to perfect due to potential breaches of security protocols. To me, there is an opportunity here for World Network to touch a number of important addressable markets, such as digital identification, financial fraud, cybersecurity, and how each of these stitch together through the broader AI fabric. There are some reports suggesting that interest is high for World IDs. Hence, there may have been a need for a capital infusion to fund the resources required to fulfill demand. With that said, I can't help but think the recent $135 million purchase of Worldcoin by A16Z and Bain Capital is anything more than a form of hedging. Said a different way, investing in the stock market right now is likely unattractive for institutional investors. Since the venture realm is inherently risky in the first place, I think it makes more sense for funds to double down on existing portfolio opportunities, as opposed to allocating any dry powder to new start-ups with little to no traction or volatile stocks. Broadly speaking, the cryptocurrency landscape is incredibly volatile. Even established cryptocurrencies such as Bitcoin often display meme-like behavior as investors chase momentum for no tangible reason. This can make the price action of cryptocurrencies highly unpredictable. Following news of the investment by A16Z and Bain Capital, Worldcoin rocketed by roughly 40%. Although these gains have retreated a bit, the crypto is still trading at levels that suggest some momentum is still holding (or HODLing). One big concern I have about investing in Worldcoin is how the legal and regulatory environment will affect World Network's ability to scale in the long run. While Altman's prominent position in the broader AI landscape could serve as an asset, I still see the project as more of an uphill battle right now. Although I understand why VCs are intrigued with Worldcoin, the majority of investors don't have the same financial flexibility as these funds. Ultimately, I think investing in Worldcoin is highly speculative (even for crypto!), and I would pass on the opportunity right now. Before you buy stock in Worldcoin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Worldcoin wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor's total average return is 982% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. Two of Silicon Valley's Most Prestigious Venture Capital Firms Just Plowed $135 Million Into Sam Altman's Crypto Project. What Do They See That Wall Street Doesn't? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
