NVIDIA Loses Billions in Q1FY26 Due to US Export Restrictions on China

NVIDIA faced significant financial losses in the first quarter of fiscal year 2026 due to export restrictions imposed by the United States on its H20 chip exports to China. The company reported charges amounting to $4.5 billion for the quarter ended April 27, 2025, resulting from the licensing requirements. Prior to the restrictions taking effect, NVIDIA had generated $4.6 billion in sales from H20 products during Q1FY26. However, it was unable to ship an additional $2.5 billion worth of H20 products revenue due to the imposed export restrictions. The company outlined the impact of these limitations on its financial performance in its quarterly financial report released recently.

In addition to the financial implications, NVIDIA CEO Jensen Huang addressed the broader strategic consequences of the US export restrictions during the Q1FY26 conference call. Huang highlighted that the $50 billion Chinese market had essentially become inaccessible to the US industry as a result. He emphasized the challenges faced by NVIDIA’s Hopper data center business in China, noting that compliance with the restrictions was not feasible, leading to a substantial write-off of inventory. Despite these setbacks, Huang acknowledged China’s progress in developing its AI capabilities, stressing that the country already possessed advanced AI technologies. He also commented on the growth of Chinese chipmakers on the global stage, posing a significant challenge to US companies.

The CEO raised concerns about the US policy assumptions regarding China’s chip manufacturing capabilities, asserting that China had significant manufacturing capacity in the industry. Huang underscored the importance of strengthening US platforms in the face of global competition, particularly in the realm of AI technologies. He emphasized the need for export controls to enhance US infrastructure and retain AI talent, rather than driving it towards rival nations.

From a financial perspective, NVIDIA reported impressive revenue growth of $44.1 billion in Q1FY26, representing a 69% increase from the previous year. The surge in revenue was predominantly driven by the company’s data center segment, which recorded revenue of $39.1 billion, marking a substantial 73% year-on-year growth. NVIDIA’s net income for the quarter stood at $18.78 billion, reflecting a notable 26% increase from the corresponding period in the previous year.

Operational highlights in Q1FY26 included the full-scale production of the Blackwell NVL72 artificial intelligence supercomputer across various system makers and cloud service providers. NVIDIA also unveiled new AI reasoning models, such as the Blackwell Ultra and NVIDIA Dynamo, to enhance its product offerings in the AI space. The company’s strategic partnerships with organizations like HUMAIN and initiatives like Stargate UAE underscore its commitment to expanding its AI capabilities on a global scale.

Despite facing challenges stemming from export restrictions, NVIDIA remains focused on innovation, strategic partnerships, and expanding its presence in key markets to position itself as a leader in the AI and semiconductor industries. The company’s strong financial performance and continued product development efforts highlight its resilience and adaptability in navigating complex geopolitical and technological landscapes.