NVIDIA Stock Skyrockets By 5.5% In After Hours As Firm Beats Q1 Revenue Estimates

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Chip designer NVIDIA Corporation’s shares soared in aftermarket trading after its revenue and earnings for the first fiscal quarter beat analyst estimates. NVIDIA posted $44 billion in revenue and 96 cents in adjusted earnings per share, excluding the impact of US sanctions on its GPU sales to China. As part of her prepared remarks, NVIDIA CEO Colette Kress shared that her firm would take a $8 billion hit in the current quarter’s sales due to H20 chip restrictions as her firm guided $45 billion in revenue for the second fiscal quarter.

NVIDIA Misses Guidance Estimates As H20 Restrictions Bite Into Revenue

Out of the three primary line items in its income statement, only NVIDA’s revenue of $44 billion beat analyst estimates of $43.29 billion. The other two items, namely the gross margin and the earnings per share, both missed the estimates. NVIDIA posted 61% in adjusted gross margin, which missed the estimate by ten percentage points, while the firm’s 81 cents in adjusted EPS missed analyst estimates of 93 cents. However, the EPS miss is attributed to a ban in its GPU sales, as excluding their impact,  the firm would have earned 96 cents in EPS.

NVIDIA’s business division revenue didn’t meet expectations either. The firm earned $39.1 billion, $34.2 billion, $4.96 billion and $567 million in data center, compute, networking and automotive revenue, respectively. Among these, only networking sales beat analyst estimates of $3.54 billion while all other missed them. Analysts had pegged the firm to rake in $39.2 billion data center sales.

As for the guidance, NVIDIA missed analyst estimates of $45.5 billion by $500 million as it guided $45 billion in Q2 sales. Within this figure, the firm estimates that it will miss out on $8 billion of GPU sales to China due to US restrictions. NVIDIA added that it was unable to ship $2.5 billion worth of products in the previous quarter due to the restrictions.

The sanctions have also left the firm wondering whether it can develop chips to sell in the Chinese AI markets. In its 10-Q filing, NVIDIA outlined that it might “be unable to create a competitive product for China’s data center market that receives approval from the USG.” Should it be unable to develop such a product, NVIDIA believes it would “effectively be foreclosed from competing in China’s data center computing/compute market.”

As part of her remarks, NVIDIA CFO Colette Kress asserted that her firm’s Blackwell “architecture ramp expand[ed] to all customer categories, while large cloud service providers remained our largest at just under 50% of Data Center revenue.” Blackwell is NVIDIA’s latest AI GPU lineup, and Kress added that the networking business’ strong performance can be attributed to higher product sales in Blackwell rack systems.

NVIDIA’s shares soared in aftermarket trading once investors digested the results. After initially jumping by 3%, the stock added to its gains and was up by 5.5% as NVIDIA’s conference call for the earnings report started. The shares are down by 2.5% year-to-date based on today’s close as they struggle to scale back the pre-DeepSeek selloff high in January. NVIDIA also tamped down on its costs in the quarter as the firm’s $3.58 billion in operating expenses and $3.99 billion in R&D expenses were lower than the respective analyst estimates of $3.63 billion and $4.07 billion.