Nvidia (NVDA) just wrapped up another blockbuster quarter, reflecting strong demand for its AI-focused chips even as the company faces fresh challenges in China.

For the first quarter, Nvidia reported $44.1 billion in revenue, a staggering 69% year-over-year jump and 12% sequential growth. The company’s data center segment continues to witness massive growth. The business reported revenue of $39.1 billion, up 73% from the same period last year. This surge reflects solid demand for Nvidia’s artificial intelligence (AI) infrastructure.

The momentum in Nvidia’s data center business was led by the rapid rollout of its Blackwell architecture, the fastest product ramp in the company’s history. Blackwell contributed about 70% of Nvidia’s data center compute revenue in Q1. Major cloud providers are deploying Blackwell GPUs at scale.

Nvidia’s networking business was another bright spot. Revenue in this segment climbed 64% sequentially, reaching $5 billion in Q1. This growth reflects the growing adoption of its fastest switch, NVLink, and the strong uptake of its Ethernet-based Spectrum-X platform. Spectrum-X is now generating over $8 billion in annualized revenue and continues to attract top-tier customers, including major cloud service providers and consumer Internet companies.  

Gaming, too, had a strong showing. Revenue hit a record $3.8 billion, up 42% year-over-year. The Blackwell architecture is now powering a new generation of GeForce RTX GPUs. With growing enthusiasm from users, Nvidia is capitalizing on its massive installed base of GeForce users.

In the automotive sector, Nvidia reported $567 million in revenue, up 72% year-over-year, driven by growing demand for self-driving technologies and electric vehicles. The company has partnered with several top players in the automotive sector, and the segment is expected to deliver solid growth in the years to come.

China Setback: A Multibillion-Dollar Blow for Nvidia

However, Nvidia’s otherwise stellar quarter was not without turbulence. The company took a $4.5 billion charge tied to its H20 GPU, a data center chip designed specifically for the China market. The U.S. government imposed new export restrictions, leaving Nvidia unable to ship $2.5 billion worth of H20 inventory. While Nvidia managed to record $4.6 billion in H20 revenue before the deadline, the sudden halt dealt a significant blow to its China business. The company warned that losing access to China’s AI accelerator market, which could expand to $50 billion, will have a material impact on future performance.

Solid Product Roadmap

Despite this headwind, Nvidia’s innovation pipeline remains strong. Sampling has already begun for the next iteration of its AI hardware, the GB300. Designed as a drop-in upgrade to GB200 systems, the GB300 will offer improved performance and will likely see solid adoption. With production shipments expected to begin later this quarter, Nvidia remains on track with its product release schedule.

Looking beyond data centers and gaming, Nvidia is expanding its footprint in professional visualization, automotive, and robotics. Its AI workstations are also likely to witness strong demand.

NVDA’s Forward Guidance Signals Continued Strength

Looking ahead, Nvidia forecasts second-quarter revenue of $45 billion, representing a 50% year-over-year increase, with continued momentum in its data center business. The ramp of Blackwell is expected to offset further declines in China-related sales. The company estimates it will forgo about $8 billion in revenue this quarter due to the ongoing export restrictions.

Wall Street Remains Bullish on Nvidia Stock

Despite the China setback, Wall Street remains optimistic. Analysts maintain a “Strong Buy” consensus on Nvidia stock. As more workloads move toward inference and AI agents become more common, the demand for AI computing is expected to grow rapidly, supporting Nvidia’s financial performance.

Conclusion

Nvidia’s latest earnings report indicates that demand for AI computing is expected to accelerate, supporting its growth. While the loss of the Chinese market presents a significant near-term challenge, Nvidia’s ability to drive record growth across its data center, networking, gaming, and automotive segments highlights the resilience and depth of its business.

The rapid adoption of its Blackwell architecture and the upcoming launch of the GB300 chip further strengthen its leadership in the AI space. As AI adoption continues to surge, Nvidia is well-positioned to capitalize on expanding demand, which will likely drive its share price higher.