Nvidia's Mixed Q1 Results Spark Stock Surge Despite Challenges

Nvidia's Q1 results show strong sales growth, but EPS missed estimates, impacting investor sentiment. With crucial implications from export controls, Nvidia's stock remains one to watch.

Date: 30-05-2025

AI Rating: 6

Nvidia's Performance in Q1 demonstrates robust sales growth with Q1 revenue reporting at $44.06 billion, exceeding forecasts of $42.91 billion and reflecting a remarkable 69% increase from the previous year’s $26.04 billion. This surge is largely attributed to a 73% year-over-year expansion in the Data Center sector, evidencing the continued demand for Nvidia's products in the market.

However, the company faced hurdles, particularly with a Q1 EPS of $0.81 that fell short of the projected $0.85, despite being a 33% improvement from the prior quarter. While long-term sales estimates remain positive, with expected significant revenue increases in the current fiscal year, the EPS miss raises concerns among investors about operational pressures ahead.

Profitability and Export Controls Impact highlight key challenges for Nvidia moving forward. Notably, the introduction of the U.S. government's export controls on the H20 data center GPU, which previously had unrestricted access to China, has resulted in a substantial $4.5 billion charge related to excess inventory. This regulation significantly constrains potential revenue streams in one of the world's largest AI markets, China, which, according to CEO Jensen Huang, is critical for the company's future success.

Nvidia’s Q2 sales guidance of $45 billion indicates continued optimism; however, this reflects a roughly $8 billion less anticipated revenue from H20 sales. The expected growth trajectory suggests a revenue increase of 49% for FY2026 and a further 24% increase in FY2027. Still, these projections must be tempered by the realities of regulatory headwinds that could hinder the company’s profit margins.

The ongoing competitive landscape and potential shifts in the demand for Nvidia’s products due to geopolitical considerations present a significant risk factor for investors. As Nvidia holds a dominant position in the GPU market, especially pertaining to AI infrastructure, the interplay between regulatory impacts and competitive dynamics in China will play a crucial role in shaping stock performance in the near term.

Stocks: NVDA MSFT TCEHY