Nvidia offers optimistic outlook despite constraints on exports to China hindering expansion growth
NVIDIA, the world's leading manufacturer of artificial intelligence chips, reported a 69% surge in sales for the quarter ended May 28, 2025. However, the company expressed concerns about increasing risks to its business as a result of the ongoing technology conflict between the United States and China.
In its quarterly filing, NVIDIA noted potential threats, such as restrictions on the use of open-source AI models from China like DeepSeek and Qwen, and US rules prohibiting connected vehicle technology from China, a market where NVIDIA's long-struggling automotive chip business has started to thrive.
NVIDIA CEO, Jensen Huang, commended US President DonaldTrump's decision to rescind an export rule that had been put in place by President Joe Biden. The rescinded rule had aimed to regulate the flow of NVIDIA's chips globally. However, Huang also mentioned the lack of a replacement rule, expressing concern that new restrictions on NVIDIA's products or operations might be implemented.
Huang also criticized the export curbs imposed by the Trump administration in April, which prevented the company from selling its H20 chip designed for the Chinese market. These restrictions cost NVIDIA $2.5 billion in sales during the just-ended fiscal first quarter, and the company expects an additional $8 billion hit during the current fiscal second quarter. Sales of the H20 in China had generated $4.6 billion in revenue for NVIDIA before the restrictions were set in place, accounting for 12.5% of overall revenue.
Huang argued that keeping Chinese open-source models like DeepSeek and Qwen running on NVIDIA chips provides US firms with valuable insights into the global AI industry's future direction. He emphasized the importance of US platforms being the preferred platform for open-source AI, stating that America benefits when models like DeepSeek and Qwen perform optimally on American infrastructure.
Despite the impact of US-China trade tensions, NVIDIA forecasted sales of $45 billion, plus or minus 2%, in the second quarter. This figure is slightly below the average estimate of analysts, but would still represent approximately 50% growth from the previous year. NVIDIA executives also highlighted potential billion-dollar deals in Saudi Arabia, the United Arab Emirates, and Taiwan, leading analysts to believe the impact of US-China trade tensions may not be as severe as initially feared.
Michael Ashley Schulman, chief investment officer of Running Point Capital, observed that rather than downplaying the China hit, Huang had contextualized it as a manageable speed bump in an otherwise hyper-accelerated growth narrative.
NVIDIA shares saw a nearly 5% increase in post-market trading on May 28, following the company's solid revenue forecast. Huang praised Trump's deal-filled tour of the Middle East, stating that the President wants US tech to lead. He also expressed agreement with a vision shared by cabinet officials such as Commerce Secretary Howard Lutnick of bringing factories back to the US and staffing them with robots.
- NVIDIA's CEO, Jensen Huang, stated that the ongoing technology conflict between the United States and China poses risks to the company's business, citing concerns about restrictions on the use of open-source AI models like DeepSeek and Qwen from China.
- In the conversation about the impact of US-China trade tensions on NVIDIA, Michael Ashley Schulman, chief investment officer of Running Point Capital, acknowledged that while the China hit was significant, Huang had framed it as a manageable speed bump in the context of the company's hyper-accelerated growth narrative.
- Amidst political discussions, NVIDIA's CEO, Jensen Huang, commended US President Donald Trump's decision to rescind an export rule regarding NVIDIA's chips, but also expressed concerns about potential future restrictions on NVIDIA's products or operations being implemented due to the lack of a replacement rule.
