AI Daily: Nvidia says China AI to move on with or without U.S. chips

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

NVIDIA RESULTS: Nvidia (NVDA) reported Q1 adjusted of EPS 81c, worse than the expected 93c, and Q1 revenue of $44.1B, with consensus at $43.25B. Jensen Huang, founder and CEO of Nvidia, said: “Our breakthrough Blackwell NVL72 AI supercomputer – a ‘thinking machine’ designed for reasoning- is now in full-scale production across system makers and cloud service providers. Global demand for NVIDIA’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world are recognizing AI as essential infrastructure – just like electricity and the internet – and NVIDIA stands at the center of this profound transformation.”

Of note, the company’s Q1 adjusted EPS ex-H20 charge impact was 96c. Nvidia said, “On April 9, 2025, NVIDIA was informed by the U.S. government that a license is required for exports of its H20 products into the China market. As a result of these new requirements, NVIDIA incurred a $4.5 billion charge in the first quarter of fiscal 2026 associated with H20 excess inventory and purchase obligations as the demand for H20 diminished. Sales of H20 products were $4.6 billion for the first quarter of fiscal 2026 prior to the new export licensing requirements. NVIDIA was unable to ship an additional $2.5 billion of H20 revenue in the first quarter. For the quarter, GAAP and non-GAAP gross margins were 60.5% and 61.0%, respectively. Excluding the $4.5 billion charge, first quarter non-GAAP gross margin would have been 71.3%. For the quarter, GAAP and non-GAAP earnings per diluted share were $0.76 and $0.81, respectively. Excluding the $4.5 billion charge and related tax impact, first quarter non-GAAP diluted earnings per share would have been $0.96.”

Nvidia sees Q2 revenue of $45.0B plus or minus 2%, with consensus $45.66B. The outlook reflects a loss in H20 revenue of approximately $8.0B due to the recent export control limitations. Nvidia also said that China AI will move on with or without U.S. chips. Export rules will help foreign rivals, the company added, saying that it expects meaningful decrease in China data center revenue. Nvidia further stated that it will consult the U.S. government if it develops new China chips.

BUY NVIDIA: Summit Insights upgraded Nvidia to Buy from Hold after its Q1 results and guidance. The risk of double-ordering on its Hopper generation AI GPU and the risk of China export controls are now priced into the stock, the firm tells investors in a research note. Summit also believes that the data center capex spending for the training market will remain robust and benefit Nvidia AI GP and data center networking businesses, the firm added.

OPENAI DEAL: Before Microsoft-backed (MSFT) OpenAI led a group of American technology companies that won a deal to build one of the world’s largest artificial-intelligence data centers in Abu Dhabi, Tesla (TSLA) CEO and Trump advisor Elon Musk worked hard to try to derail the deal if it didn’t include his own AI startup, xAI, people familiar with the matter told The Wall Street Journal‘s Dana Mattioli, Josh Dawsey and Eliot Brown. On May 22, Cisco (CSCO) announced the signing of a Memorandum of Understanding to join the Stargate UAE consortium as a preferred technology partner. The strategic MoU, signed by Cisco together with other consortium partners, G42, OpenAI, Oracle (ORCL), Nvidia and SoftBank Group (SFTBY), envisions the construction of an AI data center in Abu Dhabi with a target capacity of 1 GW.

LICENSE AGREEMENT: New York Times (NYT) and Amazon.com (AMZN) announced a multi-year licensing agreement that will bring Times editorial content to a variety of Amazon customer experiences. “This broadens the companies’ existing relationship, and will bring additional value to Amazon customers and bring Times journalism to wider audiences,” the companies said in a statement. With this new agreement, Amazon is licensing editorial content from New York Times, NYT Cooking, and The Athletic for artificial intelligence-related uses. This will include real-time display of summaries and short excerpts of Times content within Amazon products and services, such as Alexa, and training Amazon’s proprietary foundation models. “The collaboration will make The New York Times’s original content more accessible to customers across Amazon products and services, including direct links to Times products, and underscores the companies’ shared commitment to serving customers with global news and perspectives within Amazon’s AI products,” the companies said.