Nvidia Reports $44B Q1 Revenue Despite $4.5B China Export Charge

Nvidia reported record-breaking earnings for its fiscal Q1 2026, with revenue reaching $44.1 billion, a 69% year-over-year increase, driven primarily by a 73% surge in its data center segment revenue to $39.1 billion. Despite these strong results and growing demand for AI computing, the company incurred a $4.5 billion charge related to diminished demand for its China-specific H20 chips due to tightened U.S. export restrictions, which have effectively closed Nvidia out of one of the world's largest AI markets. CEO Jensen Huang criticized the U.S. government’s export controls as counterproductive and a ‘‘failure’’ that harms American companies, while emphasizing Nvidia’s position at the center of a global AI infrastructure revolution. Nvidia anticipates an $8 billion hit in the next quarter from these restrictions but expects this impact to peak soon and aims to offset lost Chinese market share through new deals in other regions. The company is also planning to strengthen its supply chain by increasing manufacturing in the U.S. and returning to gross margins around 75% later this year. Despite geopolitical challenges, Nvidia's dominant role in AI chip production remains strong, although maintaining this dominance is becoming increasingly complex due to regulatory and trade pressures.