Nvidia’s Earnings Test: Record Run Meets Unfinished Business in China

Nvidia faces high-stakes Q1 report amid unresolved China chip sales, record stock levels, and analyst targets above $300. Key focus: revenue, gross margin, and geopolitical risks.

The stakes for Nvidia’s quarterly report next week are already sky-high, but the backdrop has grown more complicated. While the stock sits near all-time highs powered by relentless demand from hyperscale cloud builders, the geopolitical fissure with China remains unresolved. The company’s attempt to secure a breakthrough for H200 chip sales during the recent Trump-Xi summit ended in disappointment, leaving a multi-billion-dollar revenue stream in limbo.

Jensen Huang traveled to Beijing with the US delegation, hoping to unlock a licensing agreement for the advanced AI chips. No deal materialized. Though Washington had cleared shipments to roughly a dozen Chinese firms including Alibaba and Tencent, Beijing is pushing its own tech champions to shift to domestic suppliers like Huawei. Several Chinese companies have since cancelled orders, while US Trade Representative Jamieson Greer noted that export controls were not a central topic of the talks. The regulatory hurdles remain stiff: buyers must prove non-military use, and under Trump’s proposed framework the US would retain 25% of the sale proceeds, with chips required to transit American territory before delivery. Analysts estimate a functioning agreement could unlock up to $4 billion in additional annual revenue, but for now that sum remains out of reach.

None of this has dampened the market’s enthusiasm. The stock closed Friday in Frankfurt at €193.90, off 3.56% from the previous session, but still up 16% over the past month and 20% year-to-date. In New York, Nvidia had touched a record closing high of $235.74 on Thursday before profit-taking knocked it back 4.42% to $225.32 on Friday. The pullback was modest, and the stock remains well above its 50-day moving average of €165.17. On a weekly basis the shares still gained roughly 6%.

That rally has been fuelled by expectations for the fiscal first-quarter earnings due Wednesday after the US market close. Nvidia’s guidance calls for revenue of $78 billion, plus or minus 2%, while consensus sits at $78.8 billion with adjusted earnings per share of $1.77. Wells Fargo, which raised its target to $315 from $265, is already above that at $80.4 billion and $1.79. Bank of America lifted its price objective to $320 from $300, arguing that Nvidia sits at the centre of an AI infrastructure market poised to expand from $1.4 trillion to $1.7 trillion. The underlying logic rests on capital spending plans from hyperscalers such as Alphabet, Amazon, Microsoft, Meta and Oracle, where analysts expect capex to jump more than 60% in 2026.

Gross margin will be another focal point. Nvidia expects a rate above 74% for the quarter, and any deviation from that level will be scrutinised as a sign of whether the intense demand remains exceptionally profitable. Beyond the numbers, the company has been building out its supply chain, announcing a multi-year partnership with Corning for optical connectivity solutions. Corning plans to boost its US fibre production by over 50%, supporting the next-generation racks and potentially the upcoming Vera-Rubin platform.

Options markets are pricing a swing of more than 7% in the stock after the release, reflecting the tension between a near-perfect run and the nagging uncertainty in China. With the H200 door still closed and the infrastructure boom accelerating, Nvidia’s earnings call will have to deliver not just growth, but growth that justifies an already stretched valuation.