All eyes will be on Nvidia’s earnings report this Wednesday as investors seek clarity on exactly how much the Trump administration’s recent chip export restrictions to China will cost the AI giant. Last month’s clampdown on Nvidia’s H20 chip—specifically designed for the Chinese market—has already resulted in a projected $5.5 billion in charges for the company.
The stakes couldn’t be higher for Nvidia, with CEO Jensen Huang recently revealing that the company has walked away from approximately $15 billion in potential sales in China due to these restrictions. This represents a significant blow considering China accounted for 13% of Nvidia’s revenue last year, and Huang estimated the overall market for AI chips in China could reach around $50 billion next year.
While Nvidia explores alternatives, including reportedly developing a new AI chipset based on its latest Blackwell architecture for the Chinese market, the uncertainty has weighed on its stock. After nearly tripling in value last year, Nvidia shares have dipped 2% in 2024 as investors recalibrate expectations amid these regulatory challenges. The primary question facing investors is whether Nvidia can increase sales in other markets enough to offset the substantial loss of its China business.