Despite a disappointing financial forecast and ongoing export restrictions to China, Nvidia’s shares jumped over 4% in after-hours trading on the NASDAQ following the release of its quarterly results. The rally continued during pre-market trading, with the tech giant posting gains of more than 5% compared to the previous day’s close. Investors responded positively to the company’s strong performance outside the Chinese market and its rapid growth in the artificial intelligence (AI) sector, which appears to offset losses in other business areas.
In the first fiscal quarter, Nvidia reported revenues of $44.06 billion, representing a 69% year-over-year increase, although slightly below the expected $44.34 billion. The company incurred significant losses due to export restrictions, including $4.5 billion in inventory write-downs and $2.5 billion in lost revenue from halted sales of H20 chips to China. The company’s second-quarter guidance anticipates revenue of approximately $45 billion ±2%, falling short of market expectations of $45.9 billion, but already accounting for an estimated $8 billion in lost revenue from the Chinese market.
The market’s upbeat reaction was largely due to Nvidia’s stronger-than-expected core financials when excluding China-related losses. Additionally, growing demand for its new Blackwell chip line fueled investor enthusiasm. CEO Jensen Huang highlighted four unexpectedly positive trends driving the company’s expansion:
- increased demand for chips used in advanced AI solving complex problems,
- partial reversal of some export control rules,
- rising business interest in AI agents,
- and the development of industrial “AI factories,” which could form the foundation for the future of global manufacturing.
Nvidia reported an adjusted gross margin of 61%, and 71.3% excluding the impact of H20 chips, in line with expectations. The price-to-earnings (P/E) ratio dropped to 28.3, signaling a more realistic valuation after strong gains of 126% in 2024 and a projected 114% in 2025. Future growth also remains robust, with forecasts of 53% in 2026 and 24% in 2027.
Despite its challenges in China, Nvidia demonstrates strong operational resilience and significant growth potential, especially in the fast-evolving AI sector. Investors appear willing to tolerate short-term risks in exchange for long-term opportunities—an outlook reflected in the continued optimism across capital markets.
Author: Krzysztof Kamiński – Oanda TMS
Disclaimer: The information contained in this publication is for informational purposes only. It does not constitute financial or investment advice and is not tailored to any specific recipient. Independent advice should be sought before relying on this information for any purpose.
