• Nvidia reports Q1 earnings of $44.1 billion, a 69% increase year-over-year.
• Trade restrictions in China result in an estimated $5.5 billion revenue hit.
• CEO Jensen Huang highlights the company's challenges in the Chinese market.

Nvidia announced impressive earnings for the first quarter of 2026, reporting revenues of $44.1 billion, marking a 69% increase year-over-year and surpassing Wall Street's expectations of $43.32 billion. However, its net profit of $18.78 billion fell short of the anticipated $19.49 billion. This quarter's earnings per share came in at $0.73, showing substantial growth from $0.61 a year earlier. The company's stock rose over 4% in after-hours trading following the announcement, solidifying its position as the second-most valuable company worldwide with a market capitalization of $3.3 trillion, according to Indiatimes and Business Insider.

The earnings report comes amidst significant challenges due to imposed trade restrictions on advanced chips to China, particularly the H20 AI chip. Nvidia has cautioned that these restrictions could result in up to $5.5 billion in charges and a potential $15 billion loss in sales. Analysts estimate that approximately $1 billion was lost in sales during the final three weeks of April alone due to these curbs, with further expected impacts of $3 billion to $4 billion per quarter, as reported by Reuters and Business Insider.

During the earnings call, CEO Jensen Huang expressed concerns regarding the future of Nvidia's operations in China, emphasizing its status as a critical market for AI development. Huang noted that the restrictions have effectively closed the $50 billion Chinese market to U.S. companies, underscoring the importance of global engagement for sustaining competitive advantages. He commented, "Global demand for Nvidia’s AI infrastructure is incredibly strong," reflecting optimism despite major market hurdles, according to South China Morning Post and Business Insider.

Looking forward, Nvidia has forecasted second-quarter revenues around $45 billion, though analysts anticipate a substantial impact from ongoing export limitations. This figure factors in an average projected loss of $8 billion from China. Despite the expected revenue hit, the company's outlook remains cautiously optimistic, with analysts highlighting a strong pipeline for the upcoming Blackwell chip architecture, which may mitigate some of the adverse effects of the restrictions, reported by New York Times and Business Insider.

The combination of robust demand in sectors not diminished by restrictions and the potential of new markets, particularly in the Middle East, thanks to easing regulations, may provide Nvidia with new growth avenues moving forward. Huang noted, "The deals he announced are wins for America, creating jobs, advancing infrastructure," positioning Nvidia to navigate the complexities of a changing geopolitical landscape effectively, according to New York Times and Reuters.