Nvidia – an AI beast ?

As a reminder, Nvidia's quarterly revenue for Q3 2022 (calendar basis) was less than $6 billion, or $5.93 billion to be exact! According to the company's guidance, quarterly revenue in Q2 2025 (calendar basis) is to be $45 billion +/-2%! This is the definition of a beast! See Figure 1. Figure 2 shows the division of revenue into business segments.

The markets interpreted the results for Q12025 very positively. The main drivers of further growth are:

(1) Grace Blackwell is in full production,

(2) Inference, once the light of workload, is surging with revenue-generating AI services; reasoning AI agents require orders of magnitude more compute,

(3) Sovereign AI, nations are investing in AI infrastructure like they once did for electricity and Internet,

(4) Enterprise AI & Industrial AI.

Nvidia, however, has a problem accessing the Chinese AI market!

Colette Kress, CFO:

“On April 9th, the U.S. government issued new export controls on H20, our data center GPU designed specifically for the China market. We sold H20 with the approval of the previous administration. (…) Losing access to the China AI accelerator market, which we believe will grow to nearly $50 billion, would have a material adverse impact on our business going forward and benefit our foreign competitors in China and worldwide.”

What means lower revenue in Q2 2025:

“Total revenue is expected to be $45 billion, plus or minus 2%. We expect modest sequential growth across all of our platforms. In Data Center, we anticipate the continued ramp of Blackwell to be partially offset by a decline in China revenue. Note, our outlook reflects a loss in H20 revenue of approximately $8 billion for the second quarter.”

And what did Jensen Huang, CEO, say about access to the Chinese market:

“China is one of the world's largest AI markets and a springboard to global success. With half of the world's AI researchers based there, the platform that wins China is positioned to lead globally. Today, however, the $50 billion China market is effectively closed to U.S. industry. The H20 export ban ended our Hopper Data Center business in China. (…) China's AI moves on with or without U.S. chips. (…) The question is not whether China will have AI, it already does. The question is whether one of the world's largest AI markets will run on American platforms. Shielding Chinese chipmakers from U.S. competition only strengthens them abroad and weakens America's position. Export restrictions have spurred China's innovation and scale. The AI race is not just about chips. It's about which stack the world runs on. As that stack grows to include 6G and quantum, U.S. global infrastructure leadership is at stake.

The U.S. has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable and now it's clearly wrong. China has enormous manufacturing capability. In the end, the platform that wins the AI developers win AI -- wins AI. Export controls should strengthen U.S. platforms, not drive half of the world's AI talent to rivals.”