Export Curbs to Hit $8B in Q2 Sales: Is NVDA Overexposed to Trade War?

NVIDIA Corporation NVDA is expected to lose around $8 billion in revenues in the second quarter of fiscal 2026 due to new U.S. government export rules. These rules block shipments of its H20 AI chips to China. This will have a big impact on NVIDIA’s second-quarter revenue growth. The company’s projection of $45 billion for second-quarter revenue represents 2% sequential growth, the slowest in the past nine quarters.

The H20 was made specifically for the Chinese market, and now NVIDIA can’t ship it. As a result, the company had to write down $4.5 billion in unsold inventory and future chip orders. This shows how much NVIDIA depended on China for sales.

There is another risk of losing one of the largest markets for AI chips. If NVIDIA can’t access the Chinese market, its growth may slow down. On the first-quarter earnings call, the company’s CEO, Jensen Huang, warned that these export controls could help China’s local chipmakers catch up faster.

To counter revenue losses from export restrictions to the Chinese market, NVIDIA is trying to grow in other regions. It is focusing on AI infrastructure deals in places like Saudi Arabia and the European Union. The company is also working with U.S. partners to build chips locally. However, none of these markets can fully replace China’s size and speed of growth.

In simple terms, NVIDIA is facing real risks from the ongoing trade tensions. The company still has strong products and demand in other regions, but being cut off from China could limit how fast it can grow in the future.

NVIDIA’s Rivals Also Feel the Heat From US Export Curbs

While NVIDIA is taking the biggest hit, Advanced Micro Devices AMD and Intel INTC are also facing challenges from the U.S. government’s AI chip export restrictions to China.

Advanced Micro Devices was banned from exporting its MI308 graphics processing units (GPUs) to China, which compete directly with NVIDIA’s data center GPUs. AMD had earlier stated that this export restriction would cost it around $800 million. China is a key growth market for AI accelerators, and missing out could limit Advanced Micro Devices’ opportunity to scale this business line.

Intel faces similar problems with its Gaudi 3 chips. The company has positioned Gaudi as a cost-effective AI solution, and China was expected to be part of its expansion strategy. However, with exports now restricted, Intel could struggle to hit volume targets, adding pressure to its already tight margins and turnaround efforts.

NVIDIA’s Price Performance, Valuation and Estimates

Shares of NVIDIA have risen around 7.1% year to date against the Zacks Semiconductor – General industry’s growth of 6%.

From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 30.48, slightly below the industry’s average of 32.79.

The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 42% and 31%, respectively. The estimates for fiscal 2026 and fiscal 2027 have been revised upward in the past seven days and 30 days, respectively.

NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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