All eyes will be on Nvidia this Wednesday as the AI chip leader reports earnings that will reveal the initial impact of U.S. export restrictions on China, while potentially highlighting new growth opportunities in the Middle East. The Trump administration’s recent decision to block sales of Nvidia’s H20 chip to Chinese customers has already resulted in a projected $5.5 billion charge, with CEO Jensen Huang revealing the company has walked away from approximately $15 billion in potential Chinese business.
The timing of these developments is particularly significant given China accounted for 13% of Nvidia’s revenue last year, and Huang recently estimated the overall market for AI chips in China could reach around $50 billion next year. Analysts project that U.S. restrictions will substantially impact Nvidia’s financial performance, with Wedbush estimating the write-downs related to H20 shipments could translate to a gross margin hit of up to 12.5%. Meanwhile, Susquehanna calculates the lost revenue could amount to as much as $4.5 billion per quarter for the remainder of the year.
Despite these challenges, potential modifications to Biden-era export regulations could open new markets for Nvidia, particularly in the Middle East. The company has already announced plans to sell hundreds of thousands of AI chips to Saudi Arabia, including 18,000 of its advanced “Blackwell” processors to a startup owned by the country’s sovereign wealth fund. Additionally, recent spending commitments from major customers like Google have helped restore investor confidence after months of concerns about slowing AI infrastructure investments, potentially providing Nvidia with alternative growth avenues as it navigates the loss of significant Chinese business.