Nvidia Stock Reacts to Earnings Report and China Tensions
Investors initially felt they missed opportunities after Nvidia (NASDAQ: NVDA) shares surged following its fiscal Q1 2026 earnings report. However, Nvidia’s stock experienced a 2.9% decline on Friday, aligning with its pre-earnings levels, influenced by various market factors.
Nvidia’s Strong Earnings Report
Nvidia reported a record $44.1 billion in revenue for fiscal Q1, surpassing expectations. However, it faced a $4.5 billion charge due to export restrictions on its H20 chip to China.
The Chinese market accounted for 13% of Nvidia’s total revenue last year. The company anticipates losing another $8 billion in H20 sales for fiscal Q2. Despite this, management remains optimistic about achieving record quarterly earnings moving forward. Investor enthusiasm was evident following the earnings report, highlighting a relatively strong business performance outside of China.
Impact of China Risks on Nvidia Stock
Concerns regarding China significantly contributed to Nvidia’s stock price drop. President Trump recently stated that trade tensions were escalating due to claims of Chinese violations of agreements made earlier this month.
In a quarterly call, CEO Jensen Huang discussed the implications of losing access to the Chinese market, stating, “The $50 billion China market is effectively closed to U.S. industry.” The ban on H20 exports has terminated Nvidia’s Hopper Data Center business in China.
The renewed tensions led to more selling than buying among investors. Despite these challenges, Nvidia continues to pursue other opportunities, remaining focused on potential future growth.
Should Investors Consider Nvidia Stock?
Before investing in Nvidia, potential buyers should note that the Motley Fool analyst team has identified other investment opportunities that may outperform Nvidia. They believe the 10 stocks on their current list could yield impressive returns, highlighting past successes such as Netflix and Nvidia, which demonstrated significant growth after earlier recommendations.
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Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
