China Market Fallout Overshadows Nvidia’s Blockbuster Sales Growth

Whoever said business is best done face-to-face should have to compensate Jensen Huang for his recent travel expenses.

The Nvidia CEO tagged along with the Trump delegation to Beijing hoping to finally close some sales for the company’s less-powerful designed-for-China H200 chips, yet arrived back in the US this week perhaps more boxed out from the Middle Kingdom than ever. As the chipmaking giant unveiled yet another blockbuster quarterly earnings report on Wednesday, it was quietly forced to reckon with the small problem of losing access to a very, very big market.

Game Over?

Tapping the Chinese market requires getting all parties involved on the same page. Not easy. Case in point: While US officials are now on board with H200 chips going to China, Beijing has refused to approve sales in a bid to boost chips from domestic alternatives like Huawei. Worse, China last week also moved to block Nvidia’s RTX 5090D V2 gaming chip, which was also specifically designed to clear Chinese customs and service Chinese gaming and animation developers.

The question of access to China moving forward loomed so large that it undermined the company’s stellar earnings report, which featured an 85% increase in revenue to $81 billion, topping estimates: 

• In a call with analysts, CFO Colette Kress confirmed that the company generated zero revenue from H200 sales to China. Its forecast of $91 billion in revenue for the second quarter also assumed no sales to data centers in the country.
• Sales to China once accounted for as much as 20% of Nvidia’s data center revenue. Shares of the company fell as much as 2% following the after-the-bell earnings call, before paring some of those losses.

A Big Hole: Huang has estimated that the Chinese AI chip market could be worth as much as $50 billion. Nvidia dominated the market before export controls and a broader trade war. Now? “Our experts are less and less confident Nvidia will be able to regain any significant foothold in the China market unless Beijing lifts restrictions,” Third Bridge sector analyst William McGonigle told The Daily Upside.