Nvidia Q1 earnings: What to expect

00:00 Josh Lipton

Let’s welcome in Yahoo Finance’s Dan Howley. Dan, what are we watching?

00:06 Dan Howley

Yeah, Josh, I mean, let’s just go over the the the numbers that we’re expecting real quick. First, uh, we’re expecting to see earnings per share of 88 cents on revenue of 43.4 billion dollars. That would be up from 61 cents and revenue of 26 billion in the same period last year. Uh, we’re also here, uh, looking for data center revenue of 39.2 billion dollars. That would be up from the 22.5 billion. Uh, and then gaming revenue, gaming, was originally a gaming company, uh, still its second largest segment, but way smaller than the data center. Uh, that’s expected to come in at 2.8 billion up from 2.6 billion. Uh, all of those numbers are important. I think that the the big one, obviously the big one is data center, but the other one that people are going to be looking at is China revenue and what that looks like, uh, after the the Trump administration banned the sale of Nvidia’s H20 chips, uh, there. Uh, the the company announced that they are taking that 5.5 billion dollar charge. The revenue for the region for the quarter was expected to come in at 6.2 billion. Uh, that would have been a 150% increase, uh, from the 2.4 billion they had previously seen. Um, and I I just want to go over, uh, something that we had seen, uh, this morning from, uh, Joseph Moore at Morgan Stanley, uh, basically saying that, look, this is something, uh, that there’s no way to offset that kind of loss, like there’s no other place for for Nvidia to really kind of come back from that for for this quarter specifically because they can’t sell Blackwell chips into China at all. Uh, these chips, the H20s, were originally built as a way for them to continue to sell devices into China after the Biden administration had said you can’t sell your your highest end chips. Uh, back then it was the Hopper chip. So the H20 is based on, uh, the Hopper technology. Now those are banned. This all kind of comes as a result of the growing fears of of, uh, China, uh, and its AI capabilities. DeepC didn’t really help with that, uh, because it the company proved that they could put out high-end models without using top of the line chips like, uh, Hopper or, uh, Blackwell itself. So, the the Trump administration, uh, kind of said, look, we’re just going to put the kibosh on that. Even though there was some inkling that they may have gotten the ability to continue to sell them. Uh, Jensen Wong has been going back and forth to, uh, to meet with Trump. But obviously, that’s going to be, I think, the the main thing that people look for is is what’s happening with China, what what their plans, uh, going forward? There’s been reports from Reuters that they’re working on, uh, a modified version of the H20 to like a China compliant exactly what they did with the the H20 to begin with, right? Making a chip specifically for the Chinese market. You know, Huawei is is gaining steam there, right? Uh, Jensen Wong’s, uh, argument is if Nvidia’s not sold in China, then you’re creating this kind of separate ecosystem, right? We’ve talked about the the two webs, right? The the internet in China, then the internet in the rest of the world. Well, there’s the idea then of the kind of two graphics card or or AI accelerator, uh, chip markets. One would be China, one would be, uh, Nvidia and and and its competitors in the rest of the world. And so what does that mean? Do you want then China to be reliant on a US technology? Jensen Wong says that’s the ideal, uh, but obviously the the administration’s saying we just don’t want them to have chips, period. So, I mean, it’s it’s going to be very interesting. Um, usually after these reports the stock kind of wavers a little bit because, you know, I think for the past few quarters people have been like, no, where’s that 400%? What’s 100%? That’s nothing. Where’s that 400% growth? So I think I think we we might also continue to see that as well.

08:40 Josh Lipton

China compliant.

08:42 Dan Howley

Exactly, yeah. Exactly what they did with the the H20 to begin with, right? Making a chip specifically for the Chinese market.

10:28 Josh Lipton

Yeah.

11:00 Josh Lipton

Yeah.

11:56 Josh Lipton

Did Dan, did did the analysts who cover the stock, do they think all the new kind of business that Jensen is able to drum up in the Middle East, Saudi Arabia and the UAE, how much that can potentially offset pressure in China?

12:57 Dan Howley

Well, yeah, I mean, I think that that’s something that obviously it’s a reprieve for them because, you know, there’s there’s now these, uh, uh, kind of I think, uh, Stacy Ragson, uh, had said Bernstein analyst had said that it’s a a way to show that there’s still deep pocketed, uh, customers out there that want access to this. And so now they have access to this. I think there was a couple hundred thousand chips that they talked about going even further beyond that, right? So there’s there’s a a desire for these chips, uh, and and video is going to be able to now sell them to those countries. And so the other thing is the AI diffusion rule, uh, was, you know, knocked down by the Trump administration. That was put in place by the Biden administration at the end of, kind of a last minute move by the Biden administration. Uh, and that would have set up a three-tier system of who can get, who meaning countries can get, uh, access to high-end AI chips. So the the there was the top, uh, that could just get, you know, free access to it, uh, a second layer, uh, that they would need specific licenses, and then a third where layer where countries that already have arms embargoes on them. That’s gone now. The Trump administration is working on some new rules, we don’t really know, but that was also, uh, good news for them in in the quarter.

15:56 Josh Lipton

What do you think, uh, so lots going on. What are your sort of one number one and number two issues, just you get the print, the conference call starts, what do you want to see, what do you want to hear tomorrow?

16:15 Dan Howley

I I want to know exactly how high data center has gone. I think that’s going to be the the the big thing. Uh, and then if we get any kind of commentary as to what they’re going to do in China. Um, that’s that’ll be the big thing, I think. If they can mention that at all, right? The Reuters reports said that they’re working on something, but if we get something on the earnings call itself and Jensen says, yeah, we’re working on something, then obviously everybody will be a lot more excited that they’re able to sell into the Chinese market. But even if they make that, there’s no guarantee that that also won’t eventually be cut off.