Nvidia's Infrastructure Gamble and the China Stalemate: A Test for Earnings

Nvidia locks in massive AI infrastructure deals with IREN and Corning, but H200 chip sales to China remain blocked, creating a contradictory setup ahead of quarterly report.

Wall Street is bracing for Nvidia's quarterly report on May 20, and the setup could hardly be more contradictory. On one side, the chipmaker is locking in massive infrastructure partnerships to fuel the next wave of AI expansion. On the other, its hopes of reopening China's market have hit a geopolitical brick wall. The earnings release will reveal which force is winning.

The most ambitious deal to date is a joint effort with IREN to accelerate the construction of up to 5 gigawatts of AI infrastructure. A flagship project is planned at the 2-gigawatt Sweetwater site in Texas. Nvidia also signed a multi-year technology and supply agreement with Corning, tasking the fiber-optic specialist with dramatically expanding its US production of optical connectivity solutions. The logic is straightforward: AI data centers demand not just faster chips but also data links capable of handling the throughput of next-generation systems. Nvidia is moving beyond traditional vendor relationships to address bottlenecks in compute, networking, and power before they can crimp growth.

Yet while Nvidia builds out the physical foundation of AI, its China business remains in a deep freeze. CEO Jensen Huang joined the US delegation to Beijing in a last-ditch effort to secure a deal for H200 AI chips during the Trump-Xi summit. No agreement materialized. Although US authorities have granted export licenses to roughly ten Chinese firms including Alibaba and Tencent, Nvidia has not shipped any H200s. Beijing is pushing domestic companies to switch to local alternatives like Huawei, and several Chinese buyers have already canceled their original orders. US Trade Representative Jamieson Greer stated that export controls were not a central topic of the talks and that the purchasing decision rested with China.

The financial stakes are significant. Nvidia's current revenue forecast of roughly $78 billion for the first quarter already excludes any contribution from Chinese H200 sales. Analysts estimate that a functioning licensing arrangement could unlock an additional $4 billion in annual revenue. The regulatory hurdles remain steep: buyers must prove non-military use, and under a Trump-brokered arrangement, the US would withhold 25% of sale proceeds, with chips required to pass through US territory before delivery.

The stock absorbed the news with a 3.56% decline on Friday to €193.90, a step back from the 52-week high of €201.05 set on May 14. On a weekly basis, however, shares still gained 6.19%. Technically, the pullback looks like a cooldown rather than a trend reversal. The price remains well above key moving averages, and the relative strength index at 57.3 signals no extreme overbought conditions.

Analysts are largely looking past the geopolitical noise and focusing on the infrastructure buildout. Bank of America raised its price target from $300 to $320, citing a significantly larger addressable market for AI data center systems that could reach $1.7 trillion by 2030. Cantor Fitzgerald lifted its target to $350, noting that Nvidia's AI chip supply for the current fiscal year is effectively sold out. Wells Fargo followed with a $315 target. All three bulls hinge their scenarios on the massive energy and infrastructure spending by tech giants — Microsoft and Amazon alone are pouring hundreds of billions into their AI data centers.

The product pipeline provides another layer of support. The next major platform, code-named "Vera Rubin," is slated to succeed Blackwell in the second half of 2026, further cementing Nvidia's grip on the AI accelerator market. For now, a smooth ramp of the current generation is what matters most, particularly the GB300 rollout and gross margins expected to exceed 75%.

When Nvidia reports after the US market close on May 20, the options market is pricing in a swing of more than 7%. Analysts anticipate revenue of approximately $78.76 billion and earnings per share of $1.74. The critical question will be whether the new infrastructure deals are already translating into faster, more profitable growth — and whether the China deadlock is starting to show up in the order book.