Latest news with #StephenNellis
Time of India
2 days ago
- Business
- Time of India
Nvidia expects $8 billion hit from US chip rules; forecast misses estimates
By Arsheeya Bajwa, Stephen Nellis Nvidia beat sales expectations during its fiscal first quarter but forecast second-quarter revenue below market estimates on Wednesday, expecting an $8 billion hit to sales from tighter U.S. curbs on exports of its AI chips to key semiconductor market China. Shares of the world's most valuable semiconductor firm still rose 4% in extended trading. The stock is relatively flat so far this year, compared with 2024 when the shares nearly tripled in value. Nvidia now faces trade restrictions on what it can sell, and the AI data center market is also maturing. Washington's years-long efforts to thwart Beijing's access to top-of-the-line U.S. technology have resulted in stricter restrictions on the export of Nvidia's AI chips - stifling the company's access to one of the largest markets for semiconductors. But Nvidia earlier this month signed a spate of new deals in the Middle East, including the first phases of a 10-square-mile data center site in the United Arab Emirates that could eventually use 5 gigawatts' worth of AI infrastructure. The company has also announced similar deals in Saudi Arabia and Taiwan. "We have a line of sight to projects requiring tens of gigawatts of Nvidia AI infrastructure in the not-too-distant future," Nvidia Chief Financial Officer Colette Kress told analysts on a conference call. But in the shorter term, Nvidia faces restrictions in China, where Kress said its data center revenue declined. New U.S. restrictions on the sale of Nvidia's H20 chips to China, the only AI processors it could legally export to the country, prompted Nvidia to disclose in April that it expected a $5.5 billion charge, while CEO Jensen Huang had in May pegged the revenue impact related to the restrictions at about $15 billion. On Wednesday, Nvidia said the actual first-quarter charge due to the H20 restrictions was $1 billion less than expected because it was able to reuse some materials. It said it lost $2.5 billion in H20 sales in the first quarter and expected to miss $8 billion in the second quarter. However, Nvidia also said the H20 brought in $4.6 billion in sales in the first quarter and that China accounted for 12.5% of overall revenue in the first quarter. Gil Luria, an analyst with D.A. Davidson, said the overall impact of the H20 restrictions was less than feared. "There was a removal of some China revenue from the July quarter guides, but there was also China revenue that was pulled into the first quarter. Chinese buyers were stocking up on H20 ahead of the restrictions, which is what propped up the April quarter," Luria said. Though major cloud companies such as Microsoft and Alphabet have stood their ground on the billions they have earmarked this year for spending on expanding infrastructure for AI data centers, worries about such spending persist amid rapidly changing global trade policies. On an adjusted basis, Nvidia earned 81 cents per share in the first quarter. Analyst estimates varied widely as Wall Street tried to assess the impact of restrictions on some of Nvidia's chip sales to China. Excluding the charges, first-quarter adjusted earnings per share would have been 96 cents. According to data compiled by LSEG, the estimate for the company's adjusted quarterly earnings was 93 cents per share, with 17 analysts providing estimates after April 15 when Nvidia said H20 shipments would require additional licenses. The artificial intelligence market bellwether expects revenue of $45 billion, plus or minus 2%, in the second quarter, compared with analysts' average estimate of $45.90 billion, according to data compiled by LSEG. The forecast includes a loss in H20 revenue of about $8 billion due to the recent export limitations. "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," said Emarketer analyst Jacob Bourne. "This doesn't signal an end to Nvidia's dominance, but highlights that sustaining it will require navigating an increasingly complex landscape of geopolitical, competitive, and economic challenges."
Yahoo
3 days ago
- Business
- Yahoo
Nvidia discloses more China risks, but CEO praises Trump
By Stephen Nellis SAN FRANCISCO (Reuters) -Even as Nvidia reported another blockbuster quarter of 69% sales growth on Wednesday, the maker of artificial intelligence chips warned of more risks to its business emerging in the technology conflict between the U.S. and China. Tucked into Nvidia's quarterly filing with U.S. securities regulators, Nvidia for the first time said that restrictions on the use of open-source AI models from China such as DeepSeek and Qwen could hurt its business, as could U.S. rules barring connected vehicle technology from China, where Nvidia's long-struggling car chip business has finally flourished. While Nvidia CEO Jensen Huang on a conference call with analysts praised U.S. President Donald Trump's decision to rescind an export rule put in place by President Joe Biden that would have regulated the flow of Nvidia's chips around the world, the company's quarterly filing noted that no new rule had been issued in its place and that a "replacement rule may impose new restrictions on our products or operations." On the other hand, Huang criticized new export curbs imposed by the Trump administration in April. The curbs stop the company from selling its H20 chip made for the Chinese market, which Huang called "a springboard to global success." The export limits cost Nvidia $2.5 billion in sales during its just-ended fiscal first quarter, and it expects another $8 billion sales hit during the current fiscal second quarter. Sales of the H20 in China earned Nvidia $4.6 billion in revenue as customers stockpiled the chips before the curbs set in. The China business accounted for 12.5% of overall revenue. "The question is not whether China will have AI - it already does. The question is whether one of the world's largest AI markets will run on American platforms," Huang said, later adding that "AI export controls should strengthen U.S. platforms, not drive half of the world's AI talent to rivals." Huang also argued that keeping Chinese open-source models such as DeepSeek and Qwen running on Nvidia chips provides U.S. firms with valuable insight on where the global AI industry is headed. "U.S. platforms must remain the preferred platform for open-source AI," he said. "That means supporting collaboration with top developers globally, including in China. America wins when models like DeepSeek and Qwen run best on American infrastructure." SALES GROWTH POWERS ON Despite the curbs, Nvidia forecast sales of $45 billion, plus or minus 2%, in the second quarter, only slightly below analysts' average estimate of $45.90 billion, according to data compiled by LSEG. That would imply growth of about 50% from a year earlier. Executives also highlighted deals worth potentially billions of dollars in the coming months and years in Saudi Arabia, the United Arab Emirates and Taiwan, sending Nvidia shares up after hours and leading analysts to conclude the impact of U.S.-China trade tensions was not as bad as feared. "Rather than downplay the China hit, (Huang) contextualized it as a known, manageable speed bump in an otherwise hyper-accelerated growth narrative," said Michael Ashley Schulman, chief investment officer of Running Point Capital. In his praise for Trump, Huang highlighted the President's deal-filled tour of the Middle East. "President Trump wants U.S. tech to lead," Huang said. "The deals he announced are wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the U.S. trade deficit." Huang also said that he agreed with a vision expressed by cabinet officials such as Commerce Secretary Howard Lutnick of bringing factories back to the United States and staffing them with robots. "Future plants will be highly computerized in robotics. We share this vision," Huang said.
Yahoo
3 days ago
- Business
- Yahoo
Nvidia discloses more China risks, but CEO praises Trump
By Stephen Nellis SAN FRANCISCO (Reuters) -Even as Nvidia reported another blockbuster quarter of 69% sales growth on Wednesday, the maker of artificial intelligence chips warned of more risks to its business emerging in the technology conflict between the U.S. and China. Tucked into Nvidia's quarterly filing with U.S. securities regulators, Nvidia for the first time said that restrictions on the use of open-source AI models from China such as DeepSeek and Qwen could hurt its business, as could U.S. rules barring connected vehicle technology from China, where Nvidia's long-struggling car chip business has finally flourished. While Nvidia CEO Jensen Huang on a conference call with analysts praised U.S. President Donald Trump's decision to rescind an export rule put in place by President Joe Biden that would have regulated the flow of Nvidia's chips around the world, the company's quarterly filing noted that no new rule had been issued in its place and that a "replacement rule may impose new restrictions on our products or operations." On the other hand, Huang criticized new export curbs imposed by the Trump administration in April. The curbs stop the company from selling its H20 chip made for the Chinese market, which Huang called "a springboard to global success." The export limits cost Nvidia $2.5 billion in sales during its just-ended fiscal first quarter, and it expects another $8 billion sales hit during the current fiscal second quarter. Sales of the H20 in China earned Nvidia $4.6 billion in revenue as customers stockpiled the chips before the curbs set in. The China business accounted for 12.5% of overall revenue. "The question is not whether China will have AI - it already does. The question is whether one of the world's largest AI markets will run on American platforms," Huang said, later adding that "AI export controls should strengthen U.S. platforms, not drive half of the world's AI talent to rivals." Huang also argued that keeping Chinese open-source models such as DeepSeek and Qwen running on Nvidia chips provides U.S. firms with valuable insight on where the global AI industry is headed. "U.S. platforms must remain the preferred platform for open-source AI," he said. "That means supporting collaboration with top developers globally, including in China. America wins when models like DeepSeek and Qwen run best on American infrastructure." SALES GROWTH POWERS ON Despite the curbs, Nvidia forecast sales of $45 billion, plus or minus 2%, in the second quarter, only slightly below analysts' average estimate of $45.90 billion, according to data compiled by LSEG. That would imply growth of about 50% from a year earlier. Executives also highlighted deals worth potentially billions of dollars in the coming months and years in Saudi Arabia, the United Arab Emirates and Taiwan, sending Nvidia shares up after hours and leading analysts to conclude the impact of U.S.-China trade tensions was not as bad as feared. "Rather than downplay the China hit, (Huang) contextualized it as a known, manageable speed bump in an otherwise hyper-accelerated growth narrative," said Michael Ashley Schulman, chief investment officer of Running Point Capital. In his praise for Trump, Huang highlighted the President's deal-filled tour of the Middle East. "President Trump wants U.S. tech to lead," Huang said. "The deals he announced are wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the U.S. trade deficit." Huang also said that he agreed with a vision expressed by cabinet officials such as Commerce Secretary Howard Lutnick of bringing factories back to the United States and staffing them with robots. "Future plants will be highly computerized in robotics. We share this vision," Huang said.
Yahoo
3 days ago
- Business
- Yahoo
Nvidia expects $8 billion hit from US chip rules; forecast misses estimates
By Arsheeya Bajwa, Stephen Nellis (Reuters) -Nvidia beat sales expectations during its fiscal first quarter but forecast second-quarter revenue below market estimates on Wednesday, expecting an $8 billion hit to sales from tighter U.S. curbs on exports of its AI chips to key semiconductor market China. Shares of the world's most valuable semiconductor firm still rose 4% in extended trading. The stock is relatively flat so far this year, compared with 2024 when the shares nearly tripled in value. Nvidia now faces trade restrictions on what it can sell, and the AI data center market is also maturing. Washington's years-long efforts to thwart Beijing's access to top-of-the-line U.S. technology have resulted in stricter restrictions on the export of Nvidia's AI chips - stifling the company's access to one of the largest markets for semiconductors. But Nvidia earlier this month signed a spate of new deals in the Middle East, including the first phases of a 10-square-mile data center site in the United Arab Emirates that could eventually use 5 gigawatts' worth of AI infrastructure. The company has also announced similar deals in Saudi Arabia and Taiwan. "We have a line of sight to projects requiring tens of gigawatts of Nvidia AI infrastructure in the not-too-distant future," Nvidia Chief Financial Officer Colette Kress told analysts on a conference call. But in the shorter term, Nvidia faces restrictions in China, where Kress said its data center revenue declined. New U.S. restrictions on the sale of Nvidia's H20 chips to China, the only AI processors it could legally export to the country, prompted Nvidia to disclose in April that it expected a $5.5 billion charge, while CEO Jensen Huang had in May pegged the revenue impact related to the restrictions at about $15 billion. On Wednesday, Nvidia said the actual first-quarter charge due to the H20 restrictions was $1 billion less than expected because it was able to reuse some materials. It said it lost $2.5 billion in H20 sales in the first quarter and expected to miss $8 billion in the second quarter. However, Nvidia also said the H20 brought in $4.6 billion in sales in the first quarter and that China accounted for 12.5% of overall revenue in the first quarter. Gil Luria, an analyst with D.A. Davidson, said the overall impact of the H20 restrictions was less than feared. "There was a removal of some China revenue from the July quarter guides, but there was also China revenue that was pulled into the first quarter. Chinese buyers were stocking up on H20 ahead of the restrictions, which is what propped up the April quarter," Luria said. Though major cloud companies such as Microsoft and Alphabet have stood their ground on the billions they have earmarked this year for spending on expanding infrastructure for AI data centers, worries about such spending persist amid rapidly changing global trade policies. On an adjusted basis, Nvidia earned 81 cents per share in the first quarter. Analyst estimates varied widely as Wall Street tried to assess the impact of restrictions on some of Nvidia's chip sales to China. Excluding the charges, first-quarter adjusted earnings per share would have been 96 cents. According to data compiled by LSEG, the estimate for the company's adjusted quarterly earnings was 93 cents per share, with 17 analysts providing estimates after April 15 when Nvidia said H20 shipments would require additional licenses. The artificial intelligence market bellwether expects revenue of $45 billion, plus or minus 2%, in the second quarter, compared with analysts' average estimate of $45.90 billion, according to data compiled by LSEG. The forecast includes a loss in H20 revenue of about $8 billion due to the recent export limitations. "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," said Emarketer analyst Jacob Bourne. "This doesn't signal an end to Nvidia's dominance, but highlights that sustaining it will require navigating an increasingly complex landscape of geopolitical, competitive, and economic challenges."
Mint
3 days ago
- Business
- Mint
Nvidia expects $8 billion hit from US chip rules; forecast misses estimates
By Arsheeya Bajwa, Stephen Nellis -Nvidia beat sales expectations during its fiscal first quarter but forecast second-quarter revenue below market estimates on Wednesday, expecting an $8 billion hit to sales from tighter U.S. curbs on exports of its AI chips to key semiconductor market China. Shares of the world's most valuable semiconductor firm still rose 4% in extended trading. The stock is relatively flat so far this year, compared with 2024 when the shares nearly tripled in value. Nvidia now faces trade restrictions on what it can sell, and the AI data center market is also maturing. Washington's years-long efforts to thwart Beijing's access to top-of-the-line U.S. technology have resulted in stricter restrictions on the export of Nvidia's AI chips - stifling the company's access to one of the largest markets for semiconductors. But Nvidia earlier this month signed a spate of new deals in the Middle East, including the first phases of a 10-square-mile data center site in the United Arab Emirates that could eventually use 5 gigawatts' worth of AI infrastructure. The company has also announced similar deals in Saudi Arabia and Taiwan. "We have a line of sight to projects requiring tens of gigawatts of Nvidia AI infrastructure in the not-too-distant future," Nvidia Chief Financial Officer Colette Kress told analysts on a conference call. But in the shorter term, Nvidia faces restrictions in China, where Kress said its data center revenue declined. New U.S. restrictions on the sale of Nvidia's H20 chips to China, the only AI processors it could legally export to the country, prompted Nvidia to disclose in April that it expected a $5.5 billion charge, while CEO Jensen Huang had in May pegged the revenue impact related to the restrictions at about $15 billion. On Wednesday, Nvidia said the actual first-quarter charge due to the H20 restrictions was $1 billion less than expected because it was able to reuse some materials. It said it lost $2.5 billion in H20 sales in the first quarter and expected to miss $8 billion in the second quarter. However, Nvidia also said the H20 brought in $4.6 billion in sales in the first quarter and that China accounted for 12.5% of overall revenue in the first quarter. Gil Luria, an analyst with D.A. Davidson, said the overall impact of the H20 restrictions was less than feared. "There was a removal of some China revenue from the July quarter guides, but there was also China revenue that was pulled into the first quarter. Chinese buyers were stocking up on H20 ahead of the restrictions, which is what propped up the April quarter," Luria said. Though major cloud companies such as Microsoft and Alphabet have stood their ground on the billions they have earmarked this year for spending on expanding infrastructure for AI data centers, worries about such spending persist amid rapidly changing global trade policies. On an adjusted basis, Nvidia earned 81 cents per share in the first quarter. Analyst estimates varied widely as Wall Street tried to assess the impact of restrictions on some of Nvidia's chip sales to China. Excluding the charges, first-quarter adjusted earnings per share would have been 96 cents. According to data compiled by LSEG, the estimate for the company's adjusted quarterly earnings was 93 cents per share, with 17 analysts providing estimates after April 15 when Nvidia said H20 shipments would require additional licenses. The artificial intelligence market bellwether expects revenue of $45 billion, plus or minus 2%, in the second quarter, compared with analysts' average estimate of $45.90 billion, according to data compiled by LSEG. The forecast includes a loss in H20 revenue of about $8 billion due to the recent export limitations. "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," said Emarketer analyst Jacob Bourne. "This doesn't signal an end to Nvidia's dominance, but highlights that sustaining it will require navigating an increasingly complex landscape of geopolitical, competitive, and economic challenges." This article was generated from an automated news agency feed without modifications to text.
