“The chip company achieved another record quarter, but temporary export bans are weighing on its business. An agreement with Trump could change that. But Nvidia remains cautious.
Nvidia continued its rapid growth last quarter and achieved record sales. However, the geopolitical disputes between the US and China are affecting its business. Due to temporary export restrictions, the American semiconductor company stated that it did not sell any of its chips specifically developed for the Chinese market to customers there in the past quarter. Although US President Donald Trump recently lifted these restrictions, the world's currently most valuable company remains cautious with regard to China and has not yet included sales from the country in its forecast for the coming reporting quarter.
Nvidia shares were down 2 percent in premarket trading on Thursday, but quickly recovered after trading began. The price has risen by more than a third since the beginning of the year, having almost tripled in 2024. In July, Nvidia became the company became the first company to exceed the four trillion dollar market capitalization mark; it has now reached $4.4 trillion. This high valuation reflects the current enthusiasm for investing in artificial intelligence. The company has so far dominated the AI chip business and, according to estimates, has a market share of more than 80 percent.
However, its dominant position in the AI chip market, which is considered particularly politically sensitive, has recently proven increasingly challenging. Even under Trump's predecessor, Joe Biden, restrictions were imposed that prohibited the sale of the most advanced AI chips in China. Nvidia responded by developing a less powerful variant of its Hopper chip series, called the H20, specifically for the Chinese market. Last year, the company generated sales of more than $17 billion in the country. In April, however, Trump imposed export restrictions on these chips as well, which is why Nvidia did not record any sales from them in China in the last fiscal quarter.
The situation has since returned to normal. At the urging of Nvidia CEO Jensen Huang, Trump lifted the export restrictions in July. However, the president negotiated that Nvidia would henceforth be required to pay 15 percent of its sales in China to the US government. This unusual export tariff will also apply to Nvidia's competitor, Advanced Micro Devices.
Nevertheless, it remains questionable to what extent Nvidia's business in China will now pick up speed. Media reported that the Chinese government has asked companies in the country not to buy Nvidia's H2O chips due to security concerns. Meanwhile, there is talk that Nvidia could instead offer a weaker version of its new Blackwell chips in China. Blackwell is the successor generation to Hopper. Trump has said he is open to it if the chips are 30 to 50 percent less powerful than in the US. Huang also described the sale of Blackwell chips in China in a conference call as a "real possibility," and he said he intends to advocate for this with the US government.
Amid the difficult geopolitical situation, Huang has recently been forced to seek increased contact with politicians and engage in a kind of chip diplomacy. He has repeatedly met with Trump and tried to flatter him. He recently said at a conference: "America's unique advantage, which no other country could ever have, is President Trump."
The Chinese business is very important to Huang. He now estimated the current potential market volume for Nvidia products in the country at $50 billion and said he expects annual growth of 50 percent. Chief Financial Officer Colette Kress said that if the geopolitical situation eases, Nvidia could ship H2O chips with a sales volume of between $2 billion and $5 billion to China as early as next quarter – although this is not yet included in the forecast. There is corresponding interest in China, and some licenses to Chinese customers have already been approved. However, questions remain. And even for the deal with Trump no official documents have yet been submitted regarding the agreed export tariff.
In a statement to the Securities and Exchange Commission (SEC), Nvidia described the agreement with Trump in strikingly negative terms that contrast sharply with Huang's effusive tone toward the president: "Any request by the U.S. government to pay a percentage of sales could expose us to lawsuits, increase our costs, and reduce our competitive position and benefit competitors to whom such agreements do not apply." There were also critical comments regarding the export restrictions: "Export controls have harmed our competitive position."
Overall, Nvidia reported revenue growth of 56 percent to $46.7 billion for the past three months, exceeding analysts' expectations of $46.1 billion on average. However, revenue in the AI chip segment was slightly below expectations. Large data center operators such as Microsoft, Google, Amazon, and Meta account for half of this revenue. With the Blackwell chips, which were launched last year, Nvidia generated 17 percent more revenue than in the previous three months. Huang spoke of "extraordinary demand."
Net profit rose 59 percent to $26.4 billion. Earnings per share of $1.05 were four cents higher than expected. For the next three months, Nvidia forecasts revenue of $54.0 billion is forecast. This was slightly higher than expected and would represent an increase of 54 percent over the previous year.
Recently, there has been increasing discussion about a possible AI bubble. It was even fueled by Sam Altman, CEO of ChatGPT developer Open AI. According to a report in the tech publication "Verge," he recently said at an event that he observed "excessive enthusiasm" among investors surrounding AI. A recent study by the Massachusetts Institute of Technology also caused a stir, finding that 95 percent of all AI projects in companies had not paid off financially. Nvidia CEO Huang expressed confidence that growth rates in the field will continue in the future. He said he expects investments in AI infrastructure of three to four trillion dollars by the end of the decade. "The opportunities ahead are immense." (Commentary, page 22.)” [1]
1. China bremst Nvidias Wachstum. Frankfurter Allgemeine Zeitung; Frankfurt. 29 Aug 2025: 21. Von Roland Lindner, New York
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