While expectations were growing that Nvidia would miss April revenue due to the China H20 ban, they reported revneue of $44.1B, up 69% y/y and above the Street by 2%. The company sold $4.6B worth of H20 chips before the restrictions took effect but couldn’t ship another $2.5 billion due to the new licensing rules. In other words, if you back out the impact of the curbs, y/y revenue growth in April would have been 79%. Data Center revenue came in a hair short of expectations, primarily due to the H20 restrictions. Gross margins were 61%, however, excluding the H20 $4.5B charge, it would have been 71.3%, ahead of the Street’s 70.2%.

For July, they guided revenue to $45B, which is up 50% y/y, missing expectation by 2%, but after adding back what management estimated to be $8B H20 hit, the guide would’ve been at $53B, or up 76% y/y, beating expectations by 13%. More on this below, but this essentially means the core business, excluding China, is doing extremely well. That fractional decline of revenue growth quarter over quarter off of a much bigger base is impressive, and the latest evidence that the company’s growth will be higher for longer.

The impact of the China ban is a continued headwind for Nvidia, as highlighted by Jensen on the call, calling China a $50 billion addressable market that they can’t access. CFO Colette Kress addressed the July quarter: “Q2 is going to be meaningfully down in terms of China data center revenue. And we had highlighted in terms of the amount of orders that we had planned for H20 in Q2, and that was $8 billion.”

Going forward, Nvidia will continue to face this loss in revenue opportunity until an agreement is reached between the Trump administration and China. That suggests each quarter without a China curb agreement will result in about a 15% hit to overall revenue.

As an aside, I estimate that an additional 10% of Nvidia’s business is going indirectly to China through third parties, many of them operating outside of China, that supply compute. In other words, I believe greater China accounts for about 25% of overall revenue.

The central question on China was: how long will the curbs last? Jensen would not speculate about when there would be a resolution with China and was hopeful that they will be able to sell directly into China again. Jensen’s message to investors was clear: I’m doing everything I can to win favor with the White House by agreeing to bring some advanced chip manufacturing to the US. Additionally, his comment that “The President has a plan. He has a vision and I trust him” suggests there is an understanding between Nvidia and the White House that will ultimately favor the company. My best guess is Nvidia will be part of a broader trade agreement with China.

Nvidia’s business, excluding China, is booming. For the July quarter, they effectively raised guidance for everything except China by 10%. Today’s July guidance was for $45 billion. Adding back the $8 billion impact of the curbs gets us to $53 billion. But the true guide-up should be measured against where Street estimates were prior to the April 9 curbs being put in place. At that time, consensus estimates called for $48 billion in revenue, so the apples-to-apples guidance versus expectations is the difference between $48 billion and $53 billion, or up 10% from just before the curbs were announced.

A more detailed way to think about the July guide is to look at changes to guidance for the business outside of China. Rewinding to late March, the Street was expecting revenue of $48 billion, of which we now know $8 billion was from the H20. In other words, estimates for outside of China called for $40 billion. The guidance for July is $45 billion, which excludes China, so it’s an apples-to-apples comparison. In that context, they guided July revenue up by $5 billion, or 13% ahead of the Street. This is a meaningful increase to guidance despite concerns that the AI buildout was slowing. As a point of reference, last quarter they raised guidance by 3%, last October by 1%, and last July by 3%.

Adding back the H20 sales to the July guidance suggests July revenue growth of 76%, compared to 79% in April after adjusting for the $2.5 billion in lost China revenue. Investors had expected a steeper step down in growth rates prior to April’s results, looking for July growth of 60%.

The bottom line: these revisions are evidence that we are still early in the AI buildout.

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