Nvidia has announced that tighter US export regulations on AI chips destined for China are expected to reduce its sales by approximately $8 billion in the upcoming quarter. Despite this setback, the chipmaker posted impressive financial results for the first quarter of fiscal year 2026, with revenue reaching $44.06 billion — a 69% increase compared to the same period last year — surpassing analyst forecasts.
China, which contributed to 13% of Nvidia’s revenue in the previous financial year, remains a key market. To comply with export controls, Nvidia introduced the H20 chip, engineered to meet US government requirements. However, the company has faced additional challenges, including a $4.5 billion charge related to surplus inventory of the H20 chip and the need for separate export licenses, which has limited sales in China.
CEO Jensen Huang described the Chinese AI chip market, valued at $50 billion, as effectively closed to US firms under current restrictions. Despite this, Nvidia’s overall global demand for AI infrastructure continues to grow, supported by major cloud providers like Microsoft and Meta, as well as emerging AI projects in countries such as Saudi Arabia and the UAE.
AI chips and data center products accounted for 88% of Nvidia’s total revenue, with its gaming division also experiencing a 42% rise year over year. The company has accelerated shipments of its new Blackwell GPU systems, designed to enhance AI reasoning capabilities, with large-scale deployments already underway.
Although US export limitations pose challenges for Nvidia’s business in China, the company is concentrating on expanding other international markets and strengthening its leadership in AI technology worldwide.
