Nvidia's revenue growth is slowing, despite overall positive financial results. The US chip designer's revenue increased by 56% to $46.7 billion, but analysts suggest cloud giants are easing data centre expansion, and export hurdles to China are creating headwinds. Nvidia anticipates $54 billion in sales for the upcoming quarter, a figure that aligns with Wall Street's expectations but falls short of more optimistic projections. This guidance excludes data centre sales to China, where US restrictions and Beijing's policies continue to pose challenges.
Nvidia reported no sales of its H20 chips to China-based customers in the last quarter. However, the company benefited from reallocating previously reserved H20 inventory, selling approximately $650 million unrestricted H20 chips to a customer outside of China. The company has cautioned about uncertainties surrounding sales to China, particularly as Washington finalises plans to claim 15% of AI chip revenue, a move Nvidia believes could trigger legal challenges, increase costs, and give competitors an advantage. Chinese chipmakers are planning to increase AI processor output, intensifying competition. Despite these challenges, Nvidia's CEO, Jensen Huang, stated that production of the next-generation Blackwell Ultra chip is ramping up, with extraordinary demand.
Despite the China situation, Nvidia's data centre unit recorded $41.1 billion in sales. The company's focus on 'sovereign AI', selling AI chips and software to governments, is expected to generate $20 billion this year. Nvidia is also proceeding with a $60 billion buyback, providing support for the stock.
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