Nvidia's earnings surged but chip export restrictions dealt a blow

Nvidia topped earnings expectations in its most recent quarter as AI chip demand continues to fuel growth for the company despite concerns about mounting U.S.-to-China export restrictions.Why it matters: Nvidia has become a bellwether stock for the AI economy as tech companies invest heavily in product development and data center capability, powering Nvidia's rise.By the numbers: The company Wednesday posted revenue of $44.1 billion for its first quarter, up 69% from a year ago and beating S&P Global Market Intelligence expectations of $43.2 billion.Adjusted earnings per share of 96 cents topped Bloomberg consensus estimates of 88 cents.The performance included a 73% year-over-year boost in first-quarter revenue in the company's data center segment to $39.1 billion.Gaming revenue rose 42% to $3.8 billion.On the U.S.-China trade issue, Nvidia warned that it expects to lose about $8 billion in second-quarter revenue from the loss of sales of H20 chips due to U.S. export control restrictions.The company incurred a $4.5 billion charge in the first quarter from excess H20 inventory due to the restrictions.Nvidia CEO Jensen Huang doubled down on his recently articulated argument that U.S. chip export controls have been "a failure," saying on Wednesday's earnings call that the restrictions have boosted Chinese innovation.Nvidia's once-dominant position in China has been significantly dented, Huang said last week — its market share in the country falling from 95% four years ago to only 50% today."The platform that wins China is positioned to lead globally today," Huang said on the call Wednesday. "However, the $50 billion China market is effectively closed to us.""The question is not whether China will have AI — it already does," he said. "The question is whether one of the world's largest AI markets will run on American platforms. Shielding Chinese chip makers from U.S. competition only strengthens them abroad and weakens America's position."The impact: Nvidia shares were trading up 4% in after-hours trading Wednesday after the call.Editor's note: This article was updated with additional information from Nvidia's earnings call.

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