Nvidia Earnings: AI Trade Rebound Intact?
- Analysts anticipate Nvidia's (NVDA) upcoming earnings report will reflect impacts from U.S.
- The restrictions led Nvidia to write off $5 billion in inventory, which is expected to reduce gross margins from the low 70s to the high 50s percentage range...
- rescinding the AI diffusion rule, initially slated to take effect in May.
Nvidia’s upcoming earnings face scrutiny, with analysts predicting the AI trade rebound remains intact despite challenges. The report likely reveals impacts from China export restrictions, potentially hitting gross margins. However, the focus is on the second half, where the Blackwell GPU ramp is anticipated to offset losses, fueled by strong demand. The recent cancellation of the AI diffusion rule provides a regulatory upside, further bolstering Nvidia’s outlook. While institutional investors have adjusted positions, a return to the AI trade is expected, especially with deals in the Middle East. Discover what’s next for Nvidia’s outlook, bringing you the latest insights from News Directory 3.
Nvidia Earnings Preview: blackwell Ramp Offsets China Drag
Analysts anticipate Nvidia’s (NVDA) upcoming earnings report will reflect impacts from U.S. export restrictions to China. Despite a potentially “messy” guide, expectations remain tempered, with the focus shifting to the latter half of the year.
The restrictions led Nvidia to write off $5 billion in inventory, which is expected to reduce gross margins from the low 70s to the high 50s percentage range this quarter. While this translates to a important revenue impact, Nvidia’s lack of explicit mention in their press release suggests potential mitigating factors.
A key growth involves the U.S. rescinding the AI diffusion rule, initially slated to take effect in May. This rule,aimed at curbing the spread of advanced AI,faced criticism for potentially hindering U.S.chipmakers’ competitiveness. Nvidia publicly opposed the AI Diffusion rule, signaling that its cancellation could outweigh the negative impacts of China restrictions.
All eyes are on the second half of the year, with the Grace Blackwell platform entering full production. CEO Jensen Huang expressed confidence in the Blackwell rollout at Computex,citing strong demand. The transition to next-generation Blackwell Ultra GB300 systems is also expected to be smoother.
Deals in the Middle East could further bolster Nvidia’s performance in the second half, offsetting the China drag. These benefits are projected to extend for five years, with a more pronounced impact in 2026 and beyond.
institutional investors have reportedly reduced their exposure to the AI trade. However, analysts believe they will likely return, driven by improving fundamentals in the latter half of the year, regardless of the second-quarter earnings.
What’s next
Investors will closely monitor Nvidia’s commentary on the Blackwell ramp and its ability to offset the China-related challenges. The company’s guidance for the second half of the year will be crucial in shaping market sentiment.