Nvidia’s Earnings: Margins Take Center Stage as China Sales Stall and Corning Bet Grows

Nvidia expected to beat Q1 revenue estimates, but gross margin direction may trigger another post-earnings decline; China chip deadlock persists despite US approvals.

Investors bracing for Nvidia’s fiscal first-quarter report on May 20 face an unusual tension: the numbers are expected to be stellar, yet the stock has developed a habit of falling after beats. Three consecutive quarters of beating forecasts have been met with post-earnings declines, a pattern the market will be watching closely as the chipmaker delivers results for the period ended April.

The consensus among analysts points to revenue of $78.8 billion and earnings per share of $1.77, with some looking for an adjusted figure of $1.78 on sales of roughly $79 billion. Nvidia’s own forecast called for about $78 billion, with a two-percent tolerance on either side. Goldman Sachs analyst James Schneider expects the company to surpass the Street by roughly $2 billion, and he sees second-quarter revenue of $87.7 billion — slightly above the average estimate of $86.6 billion — with adjusted EPS of $2.07, about six percent above consensus.

Gross margin is the variable that could move the stock more than a revenue record. The data-center segment, at the heart of Nvidia’s AI boom, is expected to contribute about $73 billion; some models project more than $75 billion. If margin slips below 73 percent, it will be interpreted as pricing pressure from the Blackwell ramp. Holding at or above 75 percent would signal that Nvidia’s pricing power remains intact. The direction of margin, rather than the absolute revenue number, is likely to determine the stock’s reaction.

Meanwhile, the China story remains a deadlock with high stakes. The US Commerce Department has approved roughly ten Chinese companies — including Alibaba, Tencent, ByteDance and JD.com — to buy Nvidia’s H200 chips, each authorized to purchase up to 75,000 units for civilian use. Not a single chip has been delivered. Deals stalled after Chinese firms received signals from Beijing to pull back, with the government concerned that a US agreement requiring chips to transit through American territory before reaching China could expose them to hidden vulnerabilities.

CEO Jensen Huang traveled to Beijing as part of a US delegation invited by President Trump ahead of a summit with Xi Jinping in Alaska, but no breakthrough emerged. Nvidia’s stock fell more than four percent on the Friday following that news, closing at $225.32. Before the tightening of export controls, Nvidia commanded 95 percent of China’s AI chip market, and the country accounted for 13 percent of total revenue. Huang has estimated the Chinese AI market alone at $50 billion this year — a pool that remains largely out of reach. Local champions such as Tencent and Alibaba are accelerating their own chip-development efforts, deepening Nvidia’s exclusion risk.

To counterbalance the China headwind, Nvidia is deepening its US supply-chain ties. The company struck a partnership with Corning under which the fiber-optic specialist will multiply its US manufacturing capacity for optical connectivity solutions tenfold and expand glass-fiber production by more than 50 percent. New plants in North Carolina and Texas are planned. Nvidia paid $500 million for warrants on up to 18 million Corning shares and holds the right to invest as much as $3.2 billion in equity over three years. The technology could eventually replace the roughly 5,000 copper cables inside Nvidia’s rack systems, such as the upcoming Vera Rubin, boosting energy efficiency and bandwidth for next-generation AI infrastructure.

Wall Street remains broadly constructive. Bank of America raised its price target on Nvidia to $320, arguing that the addressable market for AI infrastructure is expanding from $1.4 trillion to $1.7 trillion. Bernstein and Citi see the stock at $300, while UBS is more conservative at $245. Nvidia’s largest customers are also raising their bets: Meta lifted its capital-expenditure ceiling to $145 billion, and Microsoft plans to spend $190 billion this calendar year.

On the trading side, the stock has traded in a range between roughly €190 and €209 in Frankfurt over the past three months and currently stands at €195, about three percent below its 52-week high. The relative strength index of 40 suggests there is room to run on the upside. Options markets are pricing in a move of eight to ten percent following the earnings release. Huang laid out a vision at March’s GTC conference that Nvidia could generate $1 trillion in revenue from Blackwell and Vera Rubin over 2026 and 2027. Whether Wednesday’s report — and especially the second-quarter guidance — supports that trajectory will determine where the shares head next.