Nvidia Projects $108 Billion Revenue Amid Zero Chip Sales to China

Nvidia has announced an ambitious revenue forecast of $108 billion for the third quarter of fiscal 2027, building on its previous quarter's revenue of $96.2 billion. Notably, this projection assumes zero revenue from data center chip sales to China, a market that has dramatically diminished due to U.S. export controls and local purchasing restrictions.

In its latest earnings report, Nvidia revealed a staggering 106% year-over-year growth, with data center revenue alone reaching $89 billion, accounting for the majority of its income. Previously, China contributed between 13% and 20% of Nvidia's data center revenue, but this has now plummeted to less than 1%.

The company has faced a dual squeeze: U.S. restrictions on advanced chip sales to China and China's own limitations on purchasing U.S. technology. This has effectively cut off access to an estimated $50 billion annual market for AI chips. Despite these challenges, CEO Jensen Huang remains optimistic, viewing the current situation as a temporary setback.

Looking ahead, the potential for a summit between U.S. and Chinese leaders could alter the landscape of export controls, potentially reopening significant revenue streams for Nvidia. However, the company is currently planning its finances with the assumption that Chinese contributions will remain negligible.

Nvidia's ability to project such high revenues without factoring in China indicates robust investment in AI infrastructure from other global players like Microsoft, Amazon, Google, and Meta. This shift in focus may compensate for the loss of Chinese demand, highlighting the resilience of the AI market outside of China.

As Nvidia navigates these geopolitical challenges, Chinese firms are accelerating the development of domestic alternatives, which could further impact Nvidia's market share in the future.

New Developments

On September 17, Senate Democratic leader Chuck Schumer warned against easing AI chip export controls to China, emphasizing the importance of preventing the Chinese Communist Party from accessing advanced chip technology.

Schumer's remarks coincided with President Xi Jinping's upcoming visit to Washington, highlighting the urgency of maintaining strict export controls.

Concerns have arisen following the Trump administration's approval of Nvidia's H200 AI chips sales to major Chinese firms like Alibaba and Tencent, which critics argue undermines US national security.

Bipartisan efforts are underway to introduce tighter export controls on AI chips in the National Defense Authorization Act, reflecting a growing consensus on the need for stricter regulations.

Republican Rep. John Moolenaar has also expressed worries about sanctioned entities, such as Huawei, potentially circumventing existing restrictions, complicating the landscape of US-China tech relations.

The legislative push builds on previous initiatives like the CHIPS and Science Act of 2022, which aimed to enhance domestic semiconductor manufacturing capabilities.