Nvidia reported strong fiscal first-quarter earnings on Wednesday.
Wall Street was pleased with Nvidia’s continued sales growth, which hit 69% during the quarter. The company’s data center division continues to surge as companies, countries, and cloud providers snap up Nvidia graphics processors, or GPUs, for artificial intelligence software.
“The team continues to maintain a 1- 2 step lead ahead of competitors with its silicon/hardware/software platforms and a strong ecosystem, and the team is further distancing itself with its aggressive cadence of new product launches and more product segmentation over time,” wrote JPMorgan analyst Harlan Sur.
Here are three big takeaways from the company’s earnings:
China could be a $50 billion market for Nvidia, but U.S. export controls are getting in the way
Nvidia expects to sell about $45 billion in chips during the July quarter, it revealed on Wednesday, but that’s missing about $8 billion in sales that the company would have recorded if not for the U.S. restricting exports of its H20 chip without a license.
Nvidia also said that it missed out on $2.5 billion in sales during the April quarter thanks to the export restrictions on H20.
In prepared remarks, Nvidia CEO Jensen Huang said that China represented a $50 billion market that had effectively been closed to Nvidia.
He also said that the export controls were misguided, and would merely encourage Chinese AI developers to use homegrown chips, instead of making an American platform the world’s choice for AI software.
“The U.S. has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it’s clearly wrong,” Huang said.
He said that export controls were driving AI talent to use chips from homegrown Chinese rivals, such as Huawei.
“We want every developer in the world to prefer the American technology stacks,” Huang told CNBC’s Jim Cramer Wednesday night.
Nvidia said it didn’t have a replacement chip for China ready, but that it was considering options for “interesting products” that could be sold in the market.
Strength in the company’s Blackwell business balanced out some concerns over the China impact.
“NVIDIA is putting digestion fears fully to rest, showing acceleration of the business other than the China headwinds around growth drivers that seem durable. Everything should get better from here,” said Morgan Stanley analyst Joseph Moore.
Cloud providers are still Nvidia’s most important customers
Nvidia says that it has many customers ranging from sovereign nations to universities to enterprises that want to research AI.
But it confirmed again on Wednesday that cloud providers — companies like Microsoft Azure, Google Cloud, Oracle Cloud Infrastructure, and Amazon Web Services — still make up about half of its data center revenue, which reported $39.1 billion in sales during the quarter.
These companies tend to buy the fastest and latest Nvidia chips, including Blackwell, which comprised 70% of Nvidia’s data center sales during the quarter, CFO Colette Kress said.
Microsoft, for example, had already deployed “tens of thousands” of Blackwell GPUs, the company said, processing “100 trillion tokens” in the first quarter. Tokens are a measure of AI output.
And they’ll be first in line to get Blackwell Ultra, an updated version of the chip with additional memory and performance. Nvidia said shipments of those systems will start during the current quarter.
Bernstein’s Stacy Rason said the ” general outlook and environment overall seems very encouraging” as the company ramps up its Blackwell rollout and compute requirements grow.
“Amid a messy quarter, NVIDIA is comporting themselves extremely well,” he said.
Looking forward: Blackwell and AI inference
For the past few years, many Nvidia GPUs were used for a resource-intensive process called training, where data is processed through an AI model until it gains new abilities.
Now, Huang is talking up the potential for Nvidia’s GPUs to serve the AI models to millions of customers, a process called inference in the industry. He said that is where new surging demand is coming from.
“Overall, we believe NVDA’s technology leadership remains strong, with growth in Blackwell shipments benefitting from exponential growth in reasoning AI and the achievement of economies of scale,” said Deutsche Bank’s Ross Seymore.
Huang says that the latest AI models need to generate more tokens — or create more output — in order to do “reasoning,” which improves AI answers. Of course, Nvidia’s latest Blackwell chips are designed for this, Huang said.
“We are witnessing a sharp jump in inference demand,” Huang said. “OpenAI, Microsoft, and Google are seeing a step-function leap in token generation.”
Huang compared modern AI models to the “one-shot” approach that ChatGPT used when it first debuted in 2022, and said that the new models need “a hundred, a thousand times more” computing.
“It’s essentially thinking to itself, breaking down a problem step by step,” Huang said. “It might be planning multiple paths to an answer. It could be using tools, reading PDFs, reading web pages, watching videos, and then producing a result.”
Bonus: Jensen’s concerns
Huang struck a notably more somber tone during the earnings call, focusing heavily on the impact of export controls rather than his usual evangelizing about AI’s world-changing potential.
He spoke at length on the earnings call about U.S. chip restrictions and clearly stated how much of an impact the limits have on current and future business.
“The AI race is not just about chips,” he said. “It’s about which stack the world runs on. As that stack grows to include 6G and quantum, U.S. global infrastructure leadership is at stake.”
CNBC’s Kristina Partsinevelos contributed to this article.
Nvidia CEO Jensen Huang in Taipei, Taiwan, on June 2, 2024.
Ann Wang | Reuters
Nvidia’s Blackwell Ultra chips, the company’s next-generation graphics processor for artificial intelligence, have been commercially deployed at CoreWeave, the companies announced on Thursday.
CoreWeave has received shipments of Dell-built shipments based around Nvidia’s GB300 NVL72 AI systems, Dell said on Thursday. It’s the first cloud provider to install systems based around Blackwell Ultra.
The Blackwell Ultra is Nvidia’s latest chip, expected to ship in volume during the rest of the year. The systems that CoreWeave is installing are liquid-cooled and include 72 Blackwell Ultra GPUs and 36 Nvidia Grace CPUs. The systems are assembled and tested in the U.S., Dell said.
CoreWeave shares rose 6% during trading on Thursday, Dell shares were up about 2% and Nvidia rose less than 2%.
The announcement is a milestone for Nvidia.
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AI developers still clamor for the latest Nvidia chips, which have improvements that make them better for training and deploying models.
Nvidia said Blackwell Ultra can produce 50 times more AI content than its predecessor, Blackwell.
Investors closely watch how Nvidia manages the transition when it announces new AI chips to see if there are production issues or delays. Nvidia CFO Colette Kress said in May that Blackwell Ultra shipments would start in the current quarter.
It’s also a win for CoreWeave, a cloud provider that rents access to Nvidia GPUs to other clouds and AI developers. Although CoreWeave is smaller than the cloud services operated by Amazon, Google, and Microsoft, its ability to offer Nvidia’s latest chips first give it a way to differentiate itself.
CoreWeave historically has a close relationship with Nvidia, which owns a stake in the cloud provider. CoreWeave went public earlier this year, and the stock price has quadrupled since its IPO.
Jeremy Allaire, CEO and co-founder of Circle Internet Group, the issuer of one of the world’s biggest stablecoins, and Circle Internet Group co-founder Sean Neville react as they ring the opening bell, on the day of the company’s IPO, in New York City, U.S., June 5, 2025.
NYSE
For over three years, venture capital firms have been waiting for this moment.
Tech IPOs came to a virtual standstill in early 2022 due to soaring inflation and rising interest rates, while big acquisitions were mostly off the table as increased regulatory scrutiny in the U.S. and Europe turned away potential buyers.
Though it’s too soon to say those days are entirely in the past, the first half of 2025 showed signs of momentum, with June in particular producing much-needed returns for Silicon Valley’s startup financiers. In all, there were five tech IPOs last month, accelerating from a monthly average of two since January, according to data from CB Insights.
Highlighting that group was crypto company Circle, which more than doubled in its New York Stock Exchange debut on June 5, and is now up sixfold from its IPO price for a market cap of $42 billion. The stock got a big boost in mid-June after the Senate passed the GENIUS Act, which would establish a federal framework for U.S. dollar-pegged stablecoins.
Venture firms General Catalyst, Breyer Capital and Accel now own a combined $8 billion worth of Circle stock even after selling a fraction of their holdings in the offering. Silicon Valley stalwarts Greylock, Kleiner Perkins and Sequoia Capital are set to soon profit from Figma’s IPO, after the design software vendor filed its public prospectus on Tuesday. Since its $20 billion acquisition agreement with Adobe was scrapped in late 2023, Figma has been one of the most hotly anticipated IPOs in startup land.
It’s “refreshing and something that we’ve been waiting for for a long time,” said Eric Hippeau, managing partner at early-stage venture firm Lerer Hippeau, regarding the exit environment. “I’m not sure that we are confident that this can be a sustained trend yet, but it’s been very encouraging.”
Another positive sign for the industry the past couple months was the performance of artificial infrastructure provider CoreWeave, which went public in late March. The stock was relatively stagnant for its first month on the market but shot up 170% in May and another 47% in June.
For venture firms, long considered the lifeblood of risky tech startups, IPOs are essential in order to generate profits for the university endowments, foundations and pension funds that allocate a portion of their capital to the asset class. Without handsome returns, there’s little incentive for limited partners to put money into future funds.
After a record year in 2021, which saw 155 U.S. venture-backed IPOs raise $60.4 billion, according to data from University of Florida finance professor Jay Ritter, every year since has been relatively dismal. There were 13 such offerings in 2022, followed by 18 in 2023 and 30 last year, collectively raising $13.3 billion, Ritter’s data shows.
The slowdown followed the Federal Reserve’s aggressive rate-hiking campaign in 2022, meant to slow crippling inflation. As the lower-growth environment extended into years two and three, venture firms faced increasing pressure to return cash to investors.
‘Backlog of liquidity’
In its 2024 yearbook, the National Venture Capital Association said that even with a 34% increase in U.S. VC exit value last year to $98 billion, that number is 87% below the 2021 peak and less than half the average for the four years from 2017 through 2020. It’s a troubling dynamic for the 58,000 venture-backed companies that have raised a total of $947 billion from investors, according to the annual report, which is produced by the NVCA and PitchBook.
“This backlog of liquidity drought risks creating a ‘zombie company’ cohort — businesses generating operational cash flow but lacking credible exit prospects,” the report said.
Other than Circle, the latest crop of IPOs mostly consists of smaller and lesser-known brands. Health-tech companies Hinge Health and Omada Health are valued at about $3.5 billion and $1 billion, respectively. Etoro, an online trading platform, has a market cap of just over $5 billion. Online banking provider Chime Financial has a higher profile due largely to a years-long marketing blitz and is valued at close to $11.5 billion.
Meanwhile, the highest valued private companies like SpaceX, Stripe and Databricks remain on the sidelines, and AI highfliers OpenAI and Anthropic continue to raise massive amounts of cash with no intention of going public anytime soon.
Still, venture capitalists told CNBC that there are plenty of companies with the financial metrics to be public, and that more of them are readying for the process.
“The IPO market is starting to open and the VC world is cautiously optimistic,” said Rick Heitzmann, a partner at venture firm FirstMark in New York. “We are preparing companies for the next wave of public offerings.”
There are other ways to make money in the meantime. Secondary sales, a process that involves selling private shares to new investors, are on the rise, allowing early employees and investors to get some liquidity.
And then there’s what Mark Zuckerberg is doing, as he tries to position his company at the center of AI innovation and development.
Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during the Meta Connect event on Wednesday, Sept. 25, 2024.
Bloomberg | Bloomberg | Getty Images
Last month, Meta announced a $14 billion bet on Scale AI, taking a 49% stake in the AI startup in exchange for poaching founder Alexandr Wang and a small group of his top engineers. The deal effectively bought out half of the stock owned by investors, leaving them with the opportunity to make money on the rest of their holdings, should a future acquisition or IPO take place.
The deal is a big win for Accel, which led Scale AI’s Series A round in 2017, and is poised to earn more than $2.5 billion in the transaction. Index Ventures led the Series B in 2018, and Peter Thiel’s Founders Fund led the Series C the following year at a valuation of over $1 billion.
Investors now hope the Federal Reserve will move toward a rate-cutting campaign, though the central bank hasn’t committed to one. There’s also ongoing optimism that regulators will make going public less burdensome. Last week, Reuters reported, citing sources familiar with the matter, that U.S. stock exchanges and the SEC have discussed loosening regulations to make IPOs more enticing.
Mike Bellin, who heads consulting firm PwC’s U.S. IPO practice, said he anticipates a diversity of IPOs across sectors in the second half of the year. According to data from PwC, pharma and fintech were among the most active sectors for deals through the end of May.
While the recent trend in IPO activity is an encouraging sign for investors, potential roadblocks remain.
Tariffs and geopolitical uncertainty delayed IPO plans from companies including Klarna and StubHub in April. Neither has provided an update on when they plan to debut.
FirstMark’s Heitzmann said the path forward is “not at all clear,” adding that he wants to see a strong quarter of economic stability and growth before confidently saying that the market is wide open.
Additionally, other than CoreWeave and Circle, recent tech IPOs haven’t had big pops. Hinge Health, Chime and eToro have seen relatively modest gains from their offer price, while Omada Health is down.
But virtually any activity beats what VCs were experiencing the last few years. Overall, Hippeau said recent IPO trends are generally encouraging.
“There’s starting to be kind of light at the end of the tunnel,” Hippeau said.
The position was valued at about $160 million as of Wednesday’s close.
Tripadvisor shares have been flat since the start of the year after plummeting more than 30% in 2024. Last year, the travel review and booking company said it created a special committee to explore potential options.
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Starboard Value has gained a reputation for pushing for changes such as new CEOs and cost cuts by acquiring significant shares in companies.