Nvidia (NVDA, Financials) said U.S. export controls cost it $2.5 billion in Q1 revenue and could block another $8 billion in Q2. CEO Jensen Huang warned the policy is backfiring, driving Chinese developers toward local chips and undermining U.S. tech leadership. China was once a $50 billion opportunity, but the company now has no replacement chip ready for the banned H20 model.
Despite the hit, Nvidia forecast $45 billion in July-quarter sales and pointed to strength in its Blackwell chips, designed for AI inference. Demand is shifting from training to reasoning—requiring far more compute as models generate exponentially more output. Huang described it as a “sharp jump in inference demand,” with cloud partners like Microsoft (MSFT, Financials) making up half of Nvidia's $39.1 billion in data center revenue. Microsoft alone deployed “tens of thousands” of Blackwell GPUs.
Analysts remain upbeat. JPMorgan called Nvidia's lead “1-2 steps ahead of competitors,” and Morgan Stanley said the rest of the business is accelerating beyond China. Nvidia is also prepping Blackwell Ultra for release this quarter, with early access going to top cloud partners.
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