Demand for Computing Power Continues to Surge, NVIDIA’s Stock Hits New High. At the opening of U.S. trading on July 9, NVIDIA (NASDAQ: NVDA) shares rose, climbing as much as 2.8% to USD 164.42 per share, pushing its market capitalization past USD 4 trillion for the first time and surpassing Microsoft to become the world’s most valuable technology company.
Earlier this year, the sudden emergence of the DeepSeek model prompted renewed debate over whether demand for GPU chips would remain sustainable, leading to a sharp pullback in NVIDIA’s share price. In April, the Trump administration further restricted exports of NVIDIA’s H20 chips to China, triggering another adjustment in the stock. Even so, NVIDIA’s share price has still gained more than 20% so far this year. Since 2023, NVIDIA’s share price has risen more than tenfold. Now, the company’s market cap far exceeds other chipmakers, roughly equivalent to 39 Intels or 17.7 AMDs.
There have been persistent questions in the market about whether NVIDIA’s valuation is justified and whether its momentum is sustainable. Jensen Huang responded to such concerns at this year’s GPU Technology Conference (GTC) in March, saying that global data center capital expenditure will reach USD 1 trillion by 2028, and NVIDIA will continue to benefit from this trend. At GTC, NVIDIA also unveiled its next-generation Blackwell Ultra chip, designed for AI inference, and released a roadmap for four generations of chips to be launched over the next three years. Additionally, the company introduced its first open-source inference software, Dynamo, claiming it can boost the running speed of the DeepSeek-R1 model by 30 times.
From its financial results, demand for AI continues to drive NVIDIA’s performance. For its first fiscal quarter of FY2026, which ended on April 27, NVIDIA’s revenue rose 69% year-on-year to USD 44.1 billion. Non-GAAP net profit for the quarter grew 31% year-on-year to USD 19.894 billion.
Whether NVIDIA can continue supplying the Chinese market remains a key concern for investors. Under the Biden administration, the U.S. gradually restricted NVIDIA’s AI chip exports to China to the H20 chip. Despite being two generations behind NVIDIA’s most advanced architectures and having multiple features disabled, the H20 still offered the best AI chip Chinese companies could access. Over the past year, Chinese companies have been virtually the sole buyers of the H20. Despite NVIDIA’s pledge to invest USD 500 billion in the U.S., the Trump administration still announced an indefinite ban on H20 exports to China. At the time, NVIDIA estimated that due to H20 inventory, it would incur an additional USD 5.5 billion charge in Q1.
The earnings report shows that the actual expense from the H20 inventory in Q1 was USD 4.5 billion, which brought NVIDIA’s quarterly gross margin down to its lowest level since the launch of ChatGPT. On a Non-GAAP basis, the gross margin for the quarter was just 61.0%, down 12.5 percentage points sequentially and 16.9 percentage points year-on-year. NVIDIA emphasized in its earnings documents that without this impact, its Q1 gross margin would have been 71.3%.
In the earnings call, CFO Colette Kress stated that in addition to the approximately USD 4.5 billion expense, NVIDIA had USD 2.5 billion worth of H20 chips that could not be delivered in Q1, resulting in a total revenue impact of about USD 7 billion. She projected that revenue from Chinese data centers would continue to decline sharply in Q2, leading to an expected USD 8 billion revenue loss, with total revenue forecast at USD 45 billion.
Colette Kress also stressed that although revenue from Singapore accounted for as much as 20% in Q1, more than 99% of the advanced H and B series AI chips sold to Singapore were actually shipped to U.S. companies, which simply chose Singapore as their centralized billing location.
From the revenue data, it is clear that under the systematic AI chip export controls during the Biden administration, NVIDIA’s revenue share from China has declined, while revenue from Singapore has surged.
According to the financial report, for the fiscal year ending January 26, 2025, NVIDIA’s revenue from China (including Hong Kong) reached USD 17.108 billion, representing a year-on-year increase of nearly 70%. However, China’s share of NVIDIA’s total revenue dropped from nearly 17% a year ago to 13% in FY2025, making China NVIDIA’s fourth-largest market. Meanwhile, revenue from Singapore increased 2.5 times, from USD 6.831 billion in FY2024 to USD 23.684 billion in FY2025, making Singapore NVIDIA’s second-largest market, behind only the United States.