Stock down 6.5%, Nasdaq futures down 1.5%.
By Wolf Richter for WOLF STREET.
Nvidia disclosed in a filing with the SEC that it expects to charge up to $5.5 billion against earnings in its fiscal Q1 due to what would amount to a US government export ban to China of its H20 GPU, the chip it specifically designed for China to comply with the export restrictions imposed by the Biden administration on its most advanced chips. The government has said that the chips can be used in supercomputers for China’s military.
The H20 GPU, based on the Hopper architecture released in 2022, has slower interconnection speeds and bandwidth than the H100 and H200 GPUs sold in the US and other countries. The latest generation of its AI chips is the Blackwell GPU, introduced in 2024, which is not for sale in China.
DeepSeek, which shook up markets earlier this year when it released its AI model R1, had used H20 GPUs.
The charge would be “for inventory, purchase commitments, and related reserves” in China, Nvidia said.
Nvidia’s shares plunged 6.5% afterhours, to $104.93, down by 31% from its all-time high last June. Nasdaq futures dropped by 1.5%, S&P 500 futures by 1.0% at the moment.
The filing was devoid of details:
“On April 9, 2025, the U.S. government, or USG, informed NVIDIA Corporation, or the Company, that the USG requires a license for export to China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent therein, of the Company’s H20 integrated circuits and any other circuits achieving the H20’s memory bandwidth, interconnect bandwidth, or combination thereof.
“The USG indicated that the license requirement addresses the risk that the covered products may be used in, or diverted to, a supercomputer in China. On April 14, 2025, the USG informed the Company that the license requirement will be in effect for the indefinite future.
“The Company’s first quarter of fiscal year 2026 ends on April 27, 2025. First quarter results are expected to include up to approximately $5.5 billion of charges associated with H20 products for inventory, purchase commitments, and related reserves.”
The disclosure today came six days after the government had informed Nvidia on April 9 about the export license requirement.
The write-down may be in part for inventory of H20 GPUs that can no longer be sold in China and for purchase orders that can no longer be met.
The portion of China sales in Nvidia total sales has already been declining due to export restrictions. Analysts at Bernstein had estimated last month before the export restrictions were tightened that sales to China would decline to about 13% of Nvidia’s total revenues in fiscal 2025, down from a share of 17% in 2024, and down from a share of 26% in 2022, before export restrictions by the US government kicked in.
China was Nvidia’s fourth-largest region by sales last year, after the US, Singapore, and Taiwan, according to Nvidia’s annual report. It listed China’s Huawei as a competitor for the second year in a row, indicating that its GPUs are becoming competitive with some of Nvidia’s products.
The disclosure is another indication that Nvidia’s revenue growth will slow further. And that’s not a good signal for a stock price that was catapulted into the stratosphere by AI mania during which Big Tech rushed to buy Nvidia’s GPUs and pay whatever for them.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:
Sale to China is far bigger than the official figure and everybody knows that. If the third party purchase is cut off, the actual demand for Nvidia GPU will be 40% lower.
What, is a P/E of 38 high?
Asking for a friend.
PEs of 5 to 20 are normal based on current earnings, although any non-listed company is worth about 3 years current earnings.
So many buy the dip golden opportunities, I am sure by couple of weeks from now, this will be a nothing burger and FOMO retailers and institution will drive this stock back to the moon again..
If you look at the after hours trading, someone knew this ahead of the general market release. (huge spike up then down) However, I don’t expect the SEC to do anything except monitor the situation.
I will not invest in any market that shows signs of complete lawlessness and greed as this market is currently exhibiting.
The SEC must prohibit all stock trading 24hrs prior to market sensitive information releases like this. I do not hold any stock in Nvidia, However Do your Job or pack your bags
Because “we’re going to halt NVDA trading tomorrow” wouldn’t be worse?
Better to just eliminate after-hours trading. One could easily do all the trades necessary within normal operating hours. But there is a reason casinos are open 24h a day.
If you’re an investor instead of a trader, the stock market can be a very productive, if volatile, place to be. Just ask Buffet.
Probably too late but all of these export restrictions are just going to get China to catch up quicker than they already were going to. Seems better to have them as a solid customer rather than a competitor driving prices down.
“The Capitalists will sell us the rope with which we will hang them.”
Vladimir Ilich Lenin
China will attempt to research and develop cutting edge new chips whether or not they can freely buy chips from the US in the interim.
I’m buying. The other chip makers are far behind. AI will only get bigger. The need for massive amounts of energy will be the only constraint.
Nvidia and AI are the NEW dot-com bubble. Hopium, Fantasies, Fairy Tales, Find a Bigger Sucker, Wall St. Money Shenanigans, Musical Chairs, Get Rich Quick Scheme, It’s a matter of time before someone yells ‘Thar she blows!’
Not all tech companies died in the dot-com bust. The solid ones have done amazingly well.
But GPUs aren’t to future of AI. TPUs like Google builds in-house (and offers as a cloud service) are much, much cheaper to operate for the same results.
NVDA is already back to May 2024 price levels. That’s dead money for a year. It has already tested below $97 this month, which is 50MMA. If it closes April below $97, the next support is at $75.61, the 52-week low from April 19, 2024.
I think sooner or later people will realize that the line doesn’t always go up. If we stay on this course the tarrifs, loss of trust, and disinvestment in US assets will show up somewhere somehow. We’ll see how this all shakes out but Nvidia won’t be the only company posting these sort of hits due to trade restrictions and/or tarrifs.
Now imagine if companies could operate without restrictions in other countries. Other countries also put restrictions on US companies but apparently no one cared about that
NVDa is a 25 billion stock float. Unstoppable on the way up. On the way down its supertanker anchor And yes it was frontrunned. It was under an orderly distribution all day
thanks
Since (cheaper) DeepSeek R1 was launched in Jan 2025, Nvidia stock has plunged around -30% in just 3 months. A tougher China export ban of the H20 chip is only going to pressure the shares even lower. China has gone from tailwind to headwind. Wouldn’t be a surprise to see Nvidia stock down -50% from the peak before the end of 2025.
Had to lol at Singapore being the no.2 market for chips. The re-shipment market to other parts of Asia is alive and kicking ;-)
Not to worry, making tennis shoes in Ohio by hand labor will fix all this.
Farm-to-Foot Artisanal Jackboots
I mean new balance makes like 4 million shows in the US and their shoes are much more high quality than Nikes bullshit
*shoes