NVIDIA has released its Q1 earnings for the 2027 financial year, revealing that it's profited handsomely from the current AI boom despite losing its Chinese market share. The company reported $81.6 billion in revenue during Q1, primarily attributable to heightened demand for their AI chips.
This is a 20 percent increase in revenue compared to last quarter, and a massive 85 percent jump compared to the same time last year, breaking the chipmaker's records.
"The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed," NVIDIA CEO Jensen Huang said in a statement released alongside Wednesday's earnings call. "Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries."
NVIDIA also announced it is investing $80 billion into its stock buyback program, working to reacquire its own shares, while increasing dividends from $0.01 to $0.25 per share as well.
U.S. government hinders NVIDIA's sales in China
These strong results come in spite of NVIDIA's foothold in China's large market disapperaing over the past few years. While sales to China accounted for around one fifth of NVIDIA's revenue in the 2023 financial year, this dropped to 13 percent in 2024 and has continued to decline since. Last year, Huang stated that NVIDIA had gone from dominating 95 percent of China's advanced chip market to being out of it completely, holding zero market share.
Much of this drop can be attributed to U.S. government policies concerning exports to China, which have greatly impacted NVIDIA's business in the country. In 2022, the Biden administration restricted deliveries of NVIDIA's A100 and H100 chips to China due to national security concerns. The Trump administration continued to block the company's exports, preventing the company from selling its most advanced Blackwell chips to Chinese companies last year.
There are still some less powerful NVIDIA chips available in China, with the U.S. government approving sales of NVIDIA's H20 AI chips to Chinese companies last July. Created specifically for the Chinese market, these H20 chips are actually H100 chips that have had their performance throttled in order to comply with U.S. restrictions.
Unsurprisingly, uptake of these weakened chips was limited, with the Chinese government expressing national security concerns and discouraging use of NVIDIA's H20 chips.
The Trump administration also approved sales of NVIDIA's advanced H200 chips to select Chinese customers at the beginning of the year, with the U.S. government set to collect a 25 percent fee. Sources speaking to Reuters state that approved customers include Alibaba, Tencent, and even TikTok owner ByteDance, each of which are permitted to purchase up to 75,000 chips.
Despite this, there have reportedly been no deliveries of NVIDIA's chips to these approved Chinese buyers. It seems as though Chinese companies no longer have any interest in them, particularly amidst evolving restrictions and advice from both the U.S. and Chinese governments.
"They chose not to [buy the H200]," said Trump, speaking to reporters last Friday after his recent visit to Beijing. Huang also attended the trip, a last-minute addition to Trump's tech CEO entourage. "They want to try and develop their own."
The Chinese government further banned NVIDIA's RTX 5090D V2 gaming chip during Trump and Huang's visit. Like the H20, this chip was also developed specifically for China in compliance with U.S. export restrictions.
In an interview with CNBC on Wednesday, Huang stated that NVIDIA has "largely conceded" the Chinese market to competitor Huawei. NVIDIA's CEO previously estimated that China's AI market could climb to $50 billion within the next few years, and that being unable to access it would be a "tremendous loss."
"The demand in China is quite large," Huang told CNBC. "[Huawei] had a record year, they’ll likely, very likely, have an extraordinary year coming up, and their local ecosystem of chip companies are doing quite well, because we've evacuated that market."
Huang told Bloomberg earlier this week that he believes the Chinese market will eventually open up over time. For now, the AI boom seems to be more than enough to keep NVIDIA buoyed.