Hajra Naz
The first quarter of Nvidia’s fiscal year 2026 profits, which ended on April 28, has been made public. The numbers show just how much the U.S. government’s export restrictions are costing the company.
According to its earnings report, Nvidia took a $4.5 billion hit in Q1 due to new licensing rules that prevent it from selling its H20 AI chips to Chinese companies. On top of that, the chipmaker said it was unable to ship another $2.5 billion worth of H20 chips during the quarter, bringing the total impact close to $7 billion.
Back in April, when the new licensing requirements were announced, Nvidia had already warned that it could face up to $5.5 billion in related charges for Q1. Unfortunately, the final number turned out to be even worse.
And the pain doesn’t stop there. Nvidia now projects that the H20 limits will reduce its Q2 revenue by $8 billion. While the company still expects Q2 revenue to reach around $45 billion, that’s a significant setback.
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Speaking on the company’s earnings call, CEO Jensen Huang didn’t mince words about the challenges ahead. He said,
The company is looking at ways to stay competitive in China’s AI sector, but, for now, it’s been forced to write off a large chunk of its H20 inventory.
Half of the world’s AI researchers are situated in China, making it one of the biggest AI markets and a launching pad for success worldwide.
Huang said.
“The platform that wins China is positioned to lead globally today. However, the $50 billion China market is effectively closed to us.”
He added,
“The H20 export ban ended our Hopper data center business in China. We cannot reduce Hopper further to comply.”
Nvidia has been vocal in its opposition to the Trump administration’s efforts to restrict the export of high-performance U.S.-made AI chips, especially to China.
While the Biden administration recently scrapped the proposed AI Diffusion Rule, which would have imposed even tighter export controls, Huang made it clear that current policies are still causing serious damage.
Huang said.
“The question is not whether China will have AI—it already does,”. The question is whether one of the world’s largest AI markets will run on American platforms. Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens America’s position.”
