U.S. export restrictions on advanced AI chips are accelerating Huawei Technologies's rise in China, according to Jensen Huang, who said Nvidia Corp (NASDAQ:NVDA) has effectively been pushed out of a critical market.
Nvidia Says China AI Market Has Shifted To Huawei
On Wednesday, speaking to CNBC following Nvidia's first-quarter earnings report, Huang acknowledged that Huawei and China's domestic chip ecosystem have gained momentum as U.S. restrictions continue to limit Nvidia's ability to sell advanced AI processors in the country.
"The demand in China is quite large," Huang said. "Huawei is very, very strong."
He added that Nvidia has "largely conceded" the Chinese AI chip market after export controls forced the company to scale back operations there.
The comments come after the Donald Trump administration informed Nvidia in April that licenses would be required to export advanced AI chips, including products tied to its data center business, to China and several other countries.
China previously accounted for at least one-fifth of Nvidia's data center revenue.
Jensen Huang Says Investors Should ‘Expect Nothing'
Huang struck a cautious tone regarding any near-term easing of restrictions.
"I don't have any expectation," Huang said, adding that Nvidia has advised investors to "expect nothing" regarding approvals to resume advanced chip sales into China.
Still, Huang said that Nvidia would welcome the opportunity to return to the market if conditions change.
"We would be more than delighted to serve the market," he said, noting the company has operated in China for roughly three decades.
Nvidia Earnings Highlight Explosive AI Demand
Despite the China-related headwinds, Nvidia reported first-quarter revenue of $81.62 billion, up 85% year over year. The company also announced an $80 billion stock buyback program and raised its dividend.
The company projected second-quarter revenue between $89.18 billion and $92.82 billion, topping Wall Street estimates of $86.62 billion.
Earlier this month, the U.S. government approved sales of Nvidia's advanced H200 AI chips to 10 major Chinese technology companies, including Alibaba Group Holding Ltd. ADR (NYSE:BABA) and Tencent Holdings ADR (OTC:TCEHY). However, deliveries have reportedly stalled following intervention from Beijing.
Price Action: NVDA shares closed Wednesday up 1.30% at $223.47 and declined 1.26% to $220.66 in after-hours trading, according to Benzinga Pro.
Benzinga Edge Stock Rankings shows NVDA ranking in the 98th percentile for Growth and maintaining a positive price trend across its short, medium and long-term price trends.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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