Nvidia — maybe you’ve heard of it — beat on the top-line in results released after the bell on Wall Street Wednesday, but the US-China tech war was a blight.
Revenue for the quarter ended April 27 was $44.1 billion, up 69% YoY and ahead of the $43.32 billion consensus. I gotta say, that’s not a big beat in the context of Nvidia.
In the company’s defense, analysts are getting better at projecting these readouts. Every piece of Nvidia-related news, no matter how seemingly inconsequential, is parsed and scrutinized relentlessly. The days of earth-shattering upside surprises are over.
That said, Q1 data center revenue appeared to miss. Sales there were $39.1 billion, up a huge 73% from a year ago, but shy of the $39.36 billion consensus.
As the figure shows, the current-quarter top-line guide was $45 billion, plus or minus 2%. Analysts were looking for $46.37 billion.
In explaining the guide, the company cited $8 billion in lost H20 revenue tied to the Trump administration’s April decision to restrict sales of those chips to end users in China. Jensen Huang’s working to appease The White House, and although I suspect he’ll get some manner of reprieve eventually, as of right now Nvidia’s options for shipping accelerators to China are quite limited.
Nvidia last month tipped a $5.5 billion writedown tied to the China curbs. In Wednesday’s release, the company tallied a $4.5 billion charge in Q1 from excess H20 inventory. Sales of that product were $4.6 billion before the government’s new licensing requirements. “Nvidia was unable to ship an additional $2.5 billion of H20 revenue” due to the restrictions, the release said.
Stripping out the H20 charge, gross margin in Q1 was 71.3%, more or less in line with estimates, and EPS was $0.96, a beat versus the adjusted bottom-line consensus. For Q2, the company guided margins at 72%, plus or minus 50bps. That too was in line. Operating expenses (and you want the non-GAAP figure there too) will be $4 billion this quarter, Nvidia said. That’s a touch high. Analysts were looking for $3.86 billion.
Not that anyone cares about the gaming business anymore, but sales there rose 42% to $3.8 billion. That’s a new record and it was — get this — a cool billion ahead of the Street. (A $1 billion upside beat on a $2.8 billion consensus is enormous.)
True to form, Huang said everything’s going gangbusters, sans China. Blackwell’s “a ‘thinking machine'” and it’s “in full-scale production across system makers and cloud service providers,” he said. Demand for the company’s AI infrastructure is “incredible.” “AI agents” (hopefully not of the Smith variety) will become ubiquitous, creating still more demand for AI computing.
It gets better. Or scarier. “Countries around the world are recognizing AI as essential infrastructure — just like electricity and the internet,” Huang declared. “And Nvidia stands at the center of this profound transformation.”
What can you say to that? I don’t (necessarily) dispute the veracity of Huang’s grandiose proclamations, but I think we might’ve reached the point of diminishing returns on the superlative-laden cheerleading. We get it. AI’s a big deal. Nvidia’s a big deal. Jensen’s a star.
Do note: It’s quite possible the market will view Nvidia’s guide as a relief. That is: If it’s “plus” on the “plus or minus 2%,” current-quarter revenue would match expectations even with an $8 billion hit from the China restrictions. Someone will call that impressive.
The company conceded what everyone already knows: If the US-China bilateral relationship doesn’t improve, Nvidia may not be able to ship a viable product to the world’s second-largest economy. Oh well. There’s always Mohammed Bin Salman.
Oh, and one more thing: Nvidia had nearly $54 billion in cash at the end of Q1.
