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Nvidia (NVDA-1.54%) continues to go beyond expectations — even if things are a little more complicated this time around. Its strong first-quarter headline numbers show that Nvidia’s AI thesis is as strong as ever and that its margins remain elite, despite facing significant headwinds due to U.S. export restrictions on its H20 processors to China and other geopolitical concerns.
After the bell on Wednesday, the $3.3 trillion chipmaker reported $44.1 billion in revenue for the fiscal first quarter, up 69% from the same period a year ago, and the company reported a $18.78 billion profit. Analysts had forecasted a revenue surge to $43.26 billion. The H20 restrictions led to a $4.5 billion write-down related to excess inventory and a $2.5 billion revenue shortfall, affecting the company’s gross margins.
Adjusted earnings per share came in at $0.81, ahead of Wall Street estimates of $0.75. Without the H20 charge and the related tax impact, first quarter non-GAAP diluted earnings per share would have been $0.96.
Stock soared over 5% in after-hours trading and is up 25% over the past month, reflecting investor confidence amid mixed guidance and continuing market uncertainties.
With demand for generative AI infrastructure still booming and competitors struggling to catch up, Nvidia’s performance exceeded expectations. In a Tuesday note, Wedbush analysts led by Dan Ives said that Nvidia’s earnings would likely be a “bright green light” for the tech sector — especially companies heavily invested in the “AI Revolution.” And it was.
The company’s Data Center division brought in an almost unreal $39.1 billion in the first quarter, up 10% from the previous quarter and up 73% from a year ago. That means Nvidia’s fastest-growing segment is now responsible for nearly 89% of all revenue — a sign of how deeply embedded its chips are in the AI build-out. Analysts had expected this division to generate around $37 billion in Q1 revenue.
On a post-earnings-release call, CEO Jensen Huang said there are four positive surprises so far in 2025: the demand of reasoning AI, the removal of the AI diffusion rule, enterprise AI, and industrial AI. He said he foresees continued growth opportunities in AI.
“AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate,” Huang said. “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.”
He said the demand for AI reasoning is up, and “we would like to serve all of it, and I think we’re on track to serve most of it.”
Looking ahead, Nvidia projects Q2 revenue around $43 billion, slightly below Q1 figures, with gross margins expected to remain in the low 70% range. Nvidia’s outlook for this coming quarter reflects a loss in H20 revenue of approximately $8 billion.
Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report, said in a note immediately after the earnings release that he remains “bullish” on Nvidia with a year-end price target of $165.
“In our view, Nvidia remains the premier Artificial Intelligence stock and the dominant leader in GPUs,” Tentarelli wrote.
Nvidia has long relied on the Chinese market for a sizable chunk of its revenue, but that has changed dramatically in the wake of tightening U.S. export controls and tariffs. And the market is watching Nvidia warily.
“The question is not whether China will have AI. It already does. The question is whether one of the world’s latest AI markets will run on American platforms,” Huang said. “Export controls should strengthen U.S. platforms, not drive half of the world’s AI talent to rivals.”
To maintain its foothold, Nvidia is pursuing R&D efforts in Shanghai and developing China-specific downgraded chips that comply with current restrictions. The company is ground zero in the U.S.-China tech rivalry — its GPUs might just be the most valuable components in the AI arms race, and its position is increasingly shaped by policy, not just engineering. Huang said the president has a plan — “he has a vision, and I respect it,” he said.
“For Q2, we expect a meaningful decrease in China data center revenue,” Nvidia chief financial officer Colette Kress said. “Losing access to the China AI accelerator market, which we believe will grow to nearly $50 billion, would have a material adverse impact on our business going forward and benefit our foreign competitors in China and worldwide.”
Huang said there’s a bright future for onshore AI manufacturing in the U.S. — the company’s goal is “from chip to super computer — build in America within a year.” And the company has more planned, too. Kress said the company’s Blackwell Ultra AI Server will start to ship out later this quarter.
“With all the world and markets watching...the Godfather of AI Jensen [Huang] and Nvidia delivered another robust quarter after the bell,” Ives wrote in a post-earnings-release note Wednesday.
The CEO has been on a world tour — China, Taiwan, Saudi Arabia — that will continue in the coming weeks as he heads to Europe. “Just about every country needs to build out its AI infrastructure,” Huang said.
The company also posted record revenue in its gaming business, which is Nvidia’s roots: $3.8 billion revenue for the quarter, up 48% from the last quarter. And while Nvidia’s auto revenue was down 1%, it’s up 72% year over year, driven by an increased appetite for self-driving cars.
Nvidia has beat analysts’ earnings expectations in 14 of the past 16 quarters. So can anything slow Nvidia down? Maybe. Competition is heating up. AMD (AMD+0.47%) and Intel (INTC-1.50%) are sharpening their AI chip offerings, while hyperscalers are continuing to invest in custom silicon. And export restrictions remain a geopolitical wild card.
Still, as the first-quarter earnings show, Nvidia’s moat is wide. Its software ecosystem, deep relationships with cloud providers, and product cadence make it more than just a chipmaker. It’s the AI era’s platform company.