It doesn’t happen every day that a firm posts $44 billion in revenues and yet must raise a caution flag. Then again, Nvidia is no ordinary firm; it’s the GPU giant fueling our AI fantasies and Washington’s export nightmares. Nvidia reported Q1 blockbusters only to caution that the follow-up, Q2, may have an $8 billion plot gap due to the H20 chip ban in China. Geopolitics, as ever, is the obstacle. Nvidia reported its fiscal Q1 earnings on Wednesday after market close, beating Wall Street’s expectations on revenues but lagging on adjusted earnings per share (EPS) due to a sharp impact of U.S export restrictions on its H20 chips to China. Although the tech giant reported revenues of $44.1 billion, beating the $43.3 billion forecast, its adjusted EPS was $0.81, below the $0.93 consensus.

Excluding the export ban situation, EPS would have been $0.96, well above expectations. Although the company missed earnings estimates, Nvidia shares gained 5% in premarket trading on Thursday, reflecting investors’ faith in the long-term growth story of the company, especially in artificial intelligence (AI) infrastructure.

Data Center Expansion Keeps Coming

Nvidia’s data center business, the firm’s most profitable division, recorded $39.1 billion in revenues, more than 70% above year-over-year levels, but short of the $39.2 billion estimate. CFO Colette Kress indicated that nearly 50% of data center revenues came from hyperscalers such as Amazon, Google, and Microsoft, affirming Nvidia’s strong hold in the race for AI infrastructure.

CEO Jensen Huang was upbeat in his statement and said,

“Global demand for Nvidia’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. 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”.

The Export Ban Consequences

The earnings report arrives as tensions are mounting over Nvidia’s H20 chips, which were made specifically to meet the administration’s export regulations. But after a Chinese startup, DeepSeek, proved to be able to train high-power AI models on low-grade chips, the Trump administration enacted a tougher ban, taking H20s off the export-eligible lists completely. Consequently, Nvidia recorded a $4.5 billion charge in Q1 and expects as much as $8 billion lost sales in Q2, a hit that analysts caution has no offset in place today. This was announced in a regulatory filing in April.

Morgan Stanley’s Joseph Moore said,

“There is simply no offset to this. Blackwell demand is very strong … but they are supply-constrained, and lost H20 does not result in more Blackwell supply. We assume that this takes about $1 billion out of the April [quarter] — impact was effective April 7, so 23 days of lost H20 revenue—and about $5 billion of lost revenue in July. We actually think demand for H20 is much higher, driven by the surge of inference in China.”

From Constraints to Opportunity

The Trump administration just canceled Biden’s AI diffusion regulation, which removed some of the export restrictions and temporarily relieved investor worries. The reversal came as new alliances were formed, Nvidia declared it would provide hundreds of thousands of GPUs to AI startup Humain over the next five years, which is funded by Saudi Arabia’s sovereign wealth fund. This revelation, during Trump’s visit to the Middle East, also consisted of a second Project Stargate, a massive data center in the UAE constructed with Nvidia’s Blackwell chips.

Stacy Rasgon of Bernstein added,

“For investors worried about AI capex sustainability, we now have another deep pocketed customer willing and capable to spend large amounts of money on a clearly strategic push as Saudi Arabia attempts to position itself as a regional and global AI hub.”

Invention amid Ambiguity

Despite the geopolitical churn and regulatory challenges, Nvidia remains the market leader in AI hardware. The company displayed its innovation at Computex Taipei with the launch of a cloud-based solution using GPUs from partners such as CoreWeave and Foxconn. Huang, according to a report, also used the event to criticize the failures of U.S policy, suggesting that the bans have only sped up China’s indigenous chip development.

According to a report, Nvidia is currently said to be developing a new modified version of the H20 that conforms to the administration’s revised standards. In addition, additional export regulation updates are expected, leaving Nvidia in limbo as it navigates innovation, diplomacy, and delivery.

Leading Forward Through Policy Storms

Nvidia’s most recent quarter is a tale of huge demand for its AI offerings, tempered by regulatory obstacles that have erased billions in potential sales. Still, the company’s continued success in being the hub of worldwide AI investment, ranging from U.S hyperscalers to Middle Eastern sovereign wealth funds, implies its long-term prospects are healthy. Whatever Nvidia loses on Chinese chip sales, it may well make up through geopolitical diversification and persistent product innovation.

As Washington improvises trade policy and Beijing hurries to become self-reliant, Nvidia gets caught in between power games that few companies could survive, much less excel at. The firm’s supremacy in AI hardware is unchallenged, but so is the vulnerability of having to trust in geopolitical stability to export. Investors would be best served to regard export bans and changing alliances as the new normal, but as long as humanity desires smarter machines sooner, Nvidia will still be the crown jewel of AI infrastructure, injured by policy, but not defeated by it.