Nvidia beats sales expectations during its fiscal first quarter

Name: Nvidia beats sales expectations during its fiscal first quarter
Uploaded: 2025-05-29T06:24:34+00:00
Duration: 3 min 45 s
Channel: The Manila Times

The Manila Times

5/29/2025

Nvidia beats sales expectations during its fiscal first quarter

Nvidia beat sales expectations during its fiscal first quarter but forecast second-quarter revenue below market estimates on Wednesday, May 28, expecting an $8 billion hit to sales from tighter US curbs on exports of its AI chips to key semiconductor market China.

Shares of the world's most valuable semiconductor firm still rose 4% in extended trading. The stock is relatively flat so far this year, compared with 2024 when the shares nearly tripled in value. Nvidia now faces trade restrictions on what it can sell, and the AI data center market is also maturing.

Washington's years-long efforts to thwart Beijing's access to top-of-the-line US technology have resulted in stricter restrictions on the export of Nvidia's AI chips — stifling the company's access to one of the largest markets for semiconductors.

Still, "investors can breathe a sigh of relief that the China revenue impact is now known a bit better, and it’s not as severe," said Brian Colello, equity strategist for Morningstar.

REUTERS / NVIDIA / SAUDI TV

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00:00Investors can breathe a sigh of relief that the China revenue impact is now known a bit better, and it's not as severe.

00:09Meanwhile, the Blackwell products and the transition to the newer Blackwell architecture is in full swing, better than anticipated, and there's still plenty of demand in developed markets and elsewhere.

00:18So NVIDIA is still in a tremendously strong position in AI in the markets it's allowed to serve.

00:25And China, we'll see. Again, we're not necessarily betting on a China comeback, but that's pure upside if there is.

00:32The restrictions right now are really just enabling NVIDIA's competitors, and that might not be the best thing for the United States of America.

00:39We'll see how that plays out.

00:40But as of now, they were pretty clear that the restrictions are quite strict.

00:44It won't allow NVIDIA to sell anything decent into China, which is what we expected.

00:50They say they're working on trying to get around it even further, but the restrictions are very strict.

00:55And so we're not holding our breath and waiting for NVIDIA to start selling more into China.

00:59We think they are effectively blocked from selling anything decent in terms of data center products unless these restrictions get lifted.

01:07If you're looking for upside in NVIDIA, it is more deals like this, more government sovereign deals for countries that can clearly afford it.

01:16When you think about companies, a lot of this AI growth, whether it's the Microsofts or Metas of the world, they're doing it with free cash flow.

01:23So that's always reassuring to investors that they have the cash to fund this AI buildout.

01:28So now when you get to selling into countries like this, of course, they can raise the debt to fund these buildouts as well.

01:33So that's highly encouraging for the progress of these data centers.

01:36The UAE deal is absolutely massive.

01:39The Saudi Arabia one is important.

01:41And on the call, we heard Jensen say that basically every country is coming to him wanting to build out AI.

01:47So we think that's going to continue.

01:49That will probably drive upside.

01:50And that's the bull case on this stock.

01:53If you're bullish on AI at this point, you need more and more deals like Saudi and UAE to get going.

01:58And it seems quite possible that could occur.

02:01It was an impressive quarter without China in the mix or China being cut off in early April, which did have a headwind of $2.5 billion of revenue missed on the first quarter.

02:12So absent that, NVIDIA's quarter was quite strong.

02:15And then when we look at the July quarter, even though they expect to miss out on $8 billion of revenue from China for the same restrictions, they still put up pretty good guidance.

02:26They're calling for 50% year-over-year growth.

02:28So overall, I think the market reaction is a bit of a sigh of relief that China is not that significant of a headwind.

02:35Also, an underrated disclosure, we hear whispers about revenue from Singapore and whether that's being funneled into China, et cetera.

02:44And NVIDIA made its clearest statement today to us that 99% of that revenue is basically just shipped to U.S. customers that like to bill out of Singapore.

02:54So that was another encouraging sign.

02:58When you think about perhaps the risk of China revenue actually coming from other countries and being elsewhere, I'm sure there's some.

03:06There's going to be examples of smuggling, but it doesn't seem to be nearly to the extent of what is feared at this point.

03:41You