Nvidia’s Earnings Countdown: China Blockade Risks $40 Billion as Wall Street Eyes $86 Billion Guidance

Nvidia likely beats Q1 estimates with $78.8B revenue, but a China-H200 chip ban risks $35-$40B in lost sales. Market focus shifts to Q2 guidance amid geopolitical uncertainty and volatile stock performance.

When Nvidia executives take the stage on May 20 for the fiscal first-quarter earnings call, the headline numbers will likely dazzle. Consensus estimates peg revenue at $78.8 billion, with the data-center segment alone contributing $72.8 billion — a near-80% jump from the same quarter last year. Earnings per share are forecast at roughly $1.75. But behind the scenes, a diplomatic impasse with Beijing threatens to carve out a $35 billion to $40 billion slice of annual sales that may never materialise.

A US delegation led by CEO Jensen Huang recently returned from China without a breakthrough. Peking has refused to approve deliveries of the H200 chip to ten major Chinese firms — including Alibaba, Tencent, ByteDance and JD.com — even though Washington has granted export licences for up to 75,000 units each. Not a single chip has been shipped. Instead, the Chinese government is steering domestic tech companies toward Huawei’s Ascend 950PR, and a new audit rule published by the State Council now mandates checks on reliance on foreign technology. Chinese manufacturers already control 41% of the country’s market for AI accelerator servers.

Huang had previously estimated China’s AI chip market at $50 billion this year, and Nvidia once held 95% of that business before export controls were tightened. A permanent ban on H200 sales could cost the company between $35 billion and $40 billion in lost annual revenue, according to analysts. Huang has warned that a complete embargo might force China to build an entirely independent, incompatible tech ecosystem.

The market, meanwhile, has already priced in a blowout quarter. Nvidia’s own revenue guidance for Q1 stood at $78 billion, but the consensus is nearly $800 million higher. The real focus will be on the outlook. For the second quarter, investors have baked in around $86 billion in sales. If the company’s guidance falls short of that mark, the stock could suffer even if Q1 beats expectations — a pattern that has played out repeatedly. Nvidia has surpassed revenue estimates by three to four percent for six straight quarters, yet the shares closed lower after four of the last five earnings reports. Following the February 2026 release, the stock dropped 5.5%. Options markets are currently pricing in a swing of five to ten percent after the report.

Despite the geopolitical cloud, Wall Street analysts are raising their targets. Bank of America hiked its price objective to $320 from $300, citing a burgeoning total addressable market for AI data centres that could reach $1.7 trillion in the coming years. Nvidia is expected to maintain a market share of over 70% in that segment. TD Cowen lifted its target to $275 from $235, while both Bernstein and Citi hold at $300.

Beyond the quarterly numbers, the Computex trade show in early June looms as the next catalyst. Bank of America sees the possible unveiling of a new CPU. The Vera-Rubin platform, Nvidia’s next-generation architecture for data centres, is slated for the second half of 2026. CEO Huang has previously flagged a revenue opportunity exceeding $1 trillion by the end of 2027 from the Blackwell and Rubin chip families. To defend its position, the company is also expanding its software portfolio: it recently open-sourced a video-generation model called SANA-WM and released new quantum-computing tools designed to slash processor calibration times and correct errors in real time.

In Frankfurt, Nvidia shares closed at €193.90 on Friday, down 3.6% from the all-time high hit on May 14. The stock has gained roughly 20% since the start of the year and 61% over the past twelve months. The largest hyperscaler customers — Alphabet, Amazon, Meta and Microsoft — are planning combined capital expenditure of more than $700 billion for 2026, underscoring robust demand on the buy side.

Adding another layer of uncertainty, the Federal Reserve will release the minutes of its latest policy meeting on the same day as Nvidia’s earnings. That confluence could inject additional macro volatility into the semiconductor sector. For now, all eyes are on Huang’s assessment of the China situation and whether the guidance can live up to the $86 billion bar the market has set.