Nvidia reports strong Q1 earnings despite new China export controls on AI chips
Making Money host Charles Payne discusses artificial intelligence and the next frontier for computing.
Tech giant Nvidia reported its first-quarter earnings on Wednesday, beating analysts’ expectations, though it projected second-quarter sales below estimates amid tightening export controls to China that cover some of its AI chips.
Nvidia, a leader in the artificial intelligence (AI) space, saw shares rise 3% in after-hours trading following the announcement. The earnings report showed that first-quarter net income was up 26% from a year ago at nearly $19 billion, with revenue rising to $44 billion, up 69% from last year.
The company’s revenue from data centers was $39 billion in the first quarter – up 10% from the previous quarter and 73% from last year. Nvidia is also building factories in the U.S. and working to produce AI supercomputers in the U.S. with its partners.
“Our breakthrough Blackwell NVL72 AI supercomputer – a ‘thinking machine’ designed for reasoning – is now in full-scale production across system makers and cloud service providers,” said Nvidia CEO Jensen Huang.
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Nvidia CEO Jensen Huang said the company is at the center of a “profound transformation” driven by AI. (Akio Kon/Bloomberg via Getty Images / Getty Images)
“Global demand for Nvidia’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate,” he continued.
“Countries around the world are recognizing AI as essential infrastructure – just like electricity and the internet – and Nvidia stands at the center of this profound transformation,” Huang added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | NVIDIA CORP. | 134.81 | -0.69 | -0.51% |
Nvidia’s earnings release noted that on April 9, the company was informed by the U.S. government that it will require a license to export its H20 products to China, which caused the company to incur a charge of several billion dollars in the quarter.
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The U.S. has, in recent years, imposed increasingly stringent export controls on China that apply to the most advanced AI chips, as a means of denying a geopolitical adversary access to cutting-edge technology in a competitive sector of the economy.
Nvidia is headquartered in Santa Clara, California. (Photographer: Loren Elliott/Bloomberg via Getty Images / Getty Images)
“As a result of these new requirements, Nvidia incurred a $4.5 billion charge in the first quarter of fiscal 2026 associated with H20 excess inventory and purchase obligations as the demand for H20 diminished,” the company said.
“Sales of H20 products were $4.6 billion for the first quarter of fiscal 2026 prior to the new export licensing requirements. Nvidia was unable to ship an additional $2.5 billion of H20 revenue in the first quarter.”
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Nvidia added it expects to miss $8 billion in sales in the second quarter due to the export restrictions.
Reuters contributed to this report.
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