Nvidia Investors Brace for Impact of China Chip Curbs

Nvidia investors are holding their breath ahead of the company’s earnings report, anticipating a clear picture of the financial damage caused by recent U.S. export restrictions on chip sales to China. The ban on Nvidia’s H20 chip is expected to result in a $5.5 billion hit, a significant blow to a market that accounted for 13% of Nvidia’s revenue last year and that CEO Jensen Huang recently estimated could reach $50 billion for AI chips next year.
The company’s stock has already felt the pressure, down 2% this year after a remarkable near-three-fold gain last year, as concerns about the mounting costs of AI infrastructure and the uncertainty of the China business loom large. Analysts are widely forecasting a substantial impact on Q1 revenue and future guidance, with Susquehanna estimating a $1 billion sales loss in the April quarter due to the restrictions, and potentially up to $4.5 billion per quarter for the rest of the year.
While the company is reportedly developing a new AI chipset for China based on its Blackwell architecture, and the easing of the “AI diffusion rule” could open up new markets in the Middle East, the immediate focus remains on how Nvidia will navigate the China challenge. The expected drop in adjusted gross margin, potentially exceeding 11 percentage points, underscores the magnitude of the impact from these export curbs.