Chip-specialist NVIDIA [Nasdaq:NVDA] provided the market with some excellent numbers yesterday, but there was also a note of caution. NVIDIA’s revenue for the first quarter ending 27 April was up 12% from the previous quarter, at $44.1bn. That’s also a gain of 69% on this time last year.
However it was also noticeable that NVIDIA itself led with its complaint about the US government’s demand that it now needs a license for exports of its H20 exports to China. As a result of these requirements, the company flagged up that it has incurred a charge of $4.5bn for fiscal Q1 2026 for excess inventory and purchase obligations.
The company also warned that H20 demand is diminishing. What may be important for investors is that NVIDIA is prioritising this complaint in its shareholder communications this week, ahead of its impressive revenue numbers. NVIDIA is a flagship US tech company and wants to make sure its issues are also heard in Washington DC.
Huang: “The demand for AI computing will accelerate”
Jensen Huang, CEO of NVIDIA, was sounding generally upbeat yesterday about the prospects for his company:
“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. 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.”
For the quarter, GAAP and non-GAAP gross margins were 60.5% and 61.0%, respectively. Excluding the $4.5 billion charge, first quarter non-GAAP gross margin would have been 71.3%.
In terms of those earnings, NVIDIA delivered both top- and bottom-line beats with revenues at $44.1bln, and EPS at $0.96, while the margins themselves also topped expectations.
Guidance for the upcoming quarter was solid, with NVIDIA seeing Q2 revenues of $45bln +/- 2%. The stock traded about 3% higher after the figures which, while a sizeable move, was only about half what options had priced.
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Options market finds NVIDIA tough to forecast
Going into Wednesday evening, options had implied a swing of roughly plus or minus 6.8% on NVIDIA stock, which is large for a three-trillion-dollar firm. Investors wanted confirmation that NVIDIA’s revenue growth could keep pace with AI demand and that margins remained strong.
NVIDIA shares were up 1.27% at the close on Wall Street last night and the futures market is pricing in a hike in the stock of at least $141 at the open in the US today. NVDA has been seeing a nice rally off a recent floor of $94 which was established straight after Donald Trump’s 2 April Liberation Day speech on tariffs. Investors have seen gains in NVIDIA stock of more than 23% in the last month alone.
NVIDIA is worried about China trade
NVIDIA management is making no secret of its opposition to US trade restrictions with China, especially in its own area of advanced chips. Part of the concern is that this provides Chinese companies with the incentive to develop their own domestic competitors, and potentially at a cheaper price.
Chinese customers currently account for $17bn of NVIDIA’s total revenue, that’s 13% of its sales. And it comes as no surprise that Huang himself was visiting China in April in the midst of Trump’s trade spat with Beijing, to reassure his buyers there.
