US Stock Market: Nvidia Corp. saw its shares jump as much as 6% in after-hours trading following the release of its first-quarter fiscal 2026 earnings, which surpassed Wall Street expectations. The semiconductor giant reported revenue of $44.06 billion, exceeding analyst estimates of $43.31 billion, while earnings per share (EPS) came in at $0.96, also beating the consensus forecast of $0.93.
What caused the stock rally?
The primary catalyst for the stock rally, however, was Nvidia’s upbeat revenue guidance for the current quarter ending in July. The company projected sales of $45 billion, only slightly below the analyst average of $45.9 billion, despite taking into account an $8 billion hit from US export restrictions on its H20 AI chips to China.
Nvidia also revealed a $4.5 billion inventory write-down tied to the same export controls, which have significantly curtailed its ability to sell advanced data center processors to Chinese customers. CEO Jensen Huang acknowledged that the move has effectively shut Nvidia out of the Chinese AI data center market.
Nvidia’s data center segment, the company’s largest and most strategically important business, reported revenue of $39.1 billion, nearly matching expectations of $39.2 billion. Meanwhile, the company’s gaming division also delivered better-than-expected results, contributing to overall investor optimism.
Regulatory pressure in China mounts
Nvidia disclosed that Chinese regulators are investigating whether the company’s compliance with U.S. export laws results in unfair discrimination against domestic customers. Potential outcomes include financial penalties or restrictions on Nvidia’s operations in China.
CEO Huang highlighted the long-term implications, warning that the China AI accelerator market could reach $50 billion. He cautioned that the export restrictions could strengthen local competitors, posing a material risk to Nvidia’s growth in the region.