Nvidia Reveals Export Restrictions Impact on Earnings as Market Eyes AI Chip Opportunities in China

Nvidia Corporation has released its financial report for the first quarter of the 2026 fiscal year, concluding on April 27. The results surpassed expert expectations, leading to a 5% rise in its stock during after-hours trading.

Key Highlights:

The company’s revenue surged by 69% compared to the same period last year. Nvidia anticipates generating around $45 billion in the second quarter. The chipmaker believes that, without the new H20 export restrictions, this figure could have been $8 billion higher.

In the first quarter, Nvidia incurred $4.5 billion in costs due to excess H20 inventory, resulting in a $2.5 billion loss from potential additional sales.

CEO Jensen Huang mentioned during a conference call with investors that the $50 billion AI chip market in China is «effectively closed to American companies.»

«The export ban on H20 has ended our Hopper data center business in China,» he stated.

Huang noted that Nvidia is currently exploring ways to remain competitive in the Chinese AI market.

In May, reports surfaced that the company plans to launch a new AI chipset for the Chinese market at a significantly lower price compared to the H20 models.

«China is one of the largest AI markets in the world and a launching pad for global success: half of the world’s AI researchers are based there. A platform that wins in China can lead globally today,» Huang said.

He also pointed out that isolating Chinese chip manufacturers from American competition only strengthens their position and weakens the US. Other players in China are filling the void left by American companies, making their technologies more robust.

Huang cautioned that the gap with Chinese alternatives is narrowing. Huawei’s latest AI chip is performing comparably to Nvidia’s own H200.

At the same time, the chipmaker faces challenges in China due to export limitations.

«Chinese regulators are examining whether compliance with applicable US export control measures amounts to unfair discrimination against local market clients. If the authorities conclude that we have not fulfilled our obligations or violated any local laws, we could face fines and restrictions on our business operations,» the company stated.

These technology import restrictions have affected more than just Nvidia. Shares of chip design software developers Cadence and Synopsys fell by 11% and 10%, respectively, after the Financial Times reported on the White House’s ban on selling their products to clients in China.

The US Commerce Department’s Bureau of Industry and Security (BIS) sent a letter to both companies and Siemens, as reported by the newspaper.

«We are aware of the reports and speculation, but Synopsys has not received notification from the BIS,» stated Synopsys CEO Sasson Gvisit.

The restrictions have also impacted HP, which warned of «trade-related» costs amid the current tariffs and economic slowdown.

Meanwhile, a US trade court blocked the implementation of Donald Trump’s tariffs. The court ruled that the president exceeded his authority by imposing comprehensive import duties.

The US Constitution grants Congress exclusive powers to regulate foreign trade, and these powers cannot be overridden by the president, even under the guise of protecting the American economy, according to the ruling.

«The court does not assess the reasonableness or likely effectiveness of the president using tariffs as leverage. Such use is impermissible not because it is unreasonable or ineffective, but because [federal law] does not allow it,» the panel of three judges noted.

The court invalidated all of Trump’s tariff orders from January that were based on the International Emergency Economic Powers Act. However, it does not apply to certain sector-specific tariffs the president imposed on vehicles, steel, and aluminum, which were enacted under a different law.

The Trump administration has appealed this decision.

Many were awaiting Nvidia’s report to gauge the impact of the export restrictions on chip production. However, according to Kevin Cook, a senior stock strategist at Zacks Investment Research, this isn’t the most pressing issue.

He argued that a more critical focus is Nvidia’s deployment of its new equipment, the GB200 NVL72—a exascale supercomputer within a single rack. Shipments began in February.

Exascale computing represents a new frontier in supercomputing, allowing:

The GB200 NVL72 includes 72 GPUs and is priced at approximately $3 million. As deliveries have just started, there is no clear insight into their progress, Cook noted.

«If Jensen [Huang] announces that they will ship 10,000 units in the second quarter, Wall Street will be highly impressed. 10,000 units would equate to $30 billion for a $3 million product. I believe they will achieve less than 5,000,» Cook stated.

The results will provide insights into companies’ appetites for the latest AI technologies, the expert believes.

It is worth noting that in April, Trump announced new tariffs for trading partners.