Nvidia Faces a Fork in the Road: China Uncertainty Meets a $79 Billion Revenue Bar

Nvidia's May 20 earnings face dual pressures: US chip export approvals blocked by China, yet $26B revenue opportunity looms. Key focus on guidance, Blackwell ramp.

The May 20 earnings report for Nvidia lands at a rare moment of contradictory signals from Beijing and Washington. Jensen Huang travelled to Peking this week as part of a US delegation, only to find that freshly granted export approvals for tens of thousands of H200 chips had been effectively vetoed by Chinese regulators. While the US had authorised shipments to the likes of Alibaba and Tencent, local authorities are blocking the order execution, prioritising a homegrown AI infrastructure push. The bilateral summit ended on May 16 without a breakthrough on semiconductor export controls.

That backdrop makes the upcoming earnings release a high-stakes test for a stock that has already climbed more than 20% year-to-date. The shares closed Friday at €193.90, down 3.56% on the day, but the pullback looks more like a breather than a trend reversal. The real catalyst will come after the bell on Wednesday, when the market expects revenue of roughly $79 billion — a near-79% leap from the prior year.

A Potential $26 Billion Upside Hangs in the Balance

The China story is not entirely negative. The licences approved by Washington reportedly cover up to 750,000 H200 chips for about ten Chinese tech companies, which market analysts estimate could unlock as much as $26 billion in additional revenue for Nvidia. That sum is not fully baked into current consensus estimates, so any confirmation of actual deliveries during the earnings call could provide a sizeable upside surprise.

Analyst targets already reflect optimism about the broader AI demand picture. Bank of America lifted its price objective to $320, citing a $1.7 trillion addressable market for AI data centres by the end of the decade. TD Cowen and Susquehanna both peg fair value at $275, driven by sustained capital spending from cloud giants like Microsoft and Meta. The thesis is that AI models are moving from training into daily inference, prolonging the chip demand cycle.

The Numbers: Margins, Blackwell, and the Outlook

For the fiscal first quarter, the Street is looking for revenue in the $78.0–$78.5 billion range, with the data-centre segment contributing roughly $73 billion. Earnings per share are expected at $1.75–$1.77, and gross margins are forecast to land between 74.5% and 75.2%. The real focus, however, will be on the guidance for the current quarter: analysts want to see a forecast of $86–$87 billion to keep the growth narrative intact.

Production updates matter just as much. Nvidia is ramping its new Blackwell platform while simultaneously preparing the next-generation Vera Rubin architecture. CEO Jensen Huang has previously flagged a combined order backlog for Blackwell and Rubin exceeding $1 trillion through the end of 2027 — a sign of how far the demand curve now stretches.

Caution from Zurich and the 82% CFROI Red Flag

Not everyone is buying the bullish consensus. UBS has flagged several large semiconductor names as overbought and warns that Nvidia’s cash-flow return on invested capital — a staggering 82% — makes the stock vulnerable to a mean-reversion shock. That high CFROI, while a testament to profit machine status, also implies that any disruption to the China business or a slip in the Blackwell ramp could trigger a sharper re-rating than the current price suggests.

With both a potential China windfall and the reality of blocked shipments sitting on the same table, Wednesday’s conference call becomes a binary event. If management incorporates a meaningful China contribution into the outlook, the stock could challenge its recent 52-week high near €201. If the geopolitical headwinds remain unresolved, the pause in the rally may stretch longer. Either way, the next few days will define whether Nvidia’s two-speed engine — unstoppable AI demand versus a stalled China front — can keep the shares climbing.