Nvidia's $4.6B China loss contrasts with AMD's blowout quarter

Nvidia's Q1 FY27 revenue of $81.6 billion, up 85 percent year over year, masked a $4.6 billion-per-quarter China hole from export restrictions, while AMD posted its own blowout quarter with a different China profile.

"The commencement of Vera Rubin next-generation chip deliveries marks the beginning of an extended upgrade cycle spanning multiple quarters," Bank of America analyst Vivek Arya wrote in an August 7 note, calling Nvidia his top sector pick ahead of the Aug. 26 earnings report.

Nvidia's Q2 FY27 guidance of $91 billion excludes any Data Center compute revenue from China, erasing what used to be roughly $4.6 billion per quarter in H20 sales. AMD's MI-series accelerators face no equivalent export restriction on China sales, giving the company a path to capture share in a market Nvidia has been forced to vacate.

The divergence matters because China remains one of the largest AI compute markets. Nvidia's non-China demand is more than offsetting the shortfall — management still guided $91 billion for Q2 — but AMD's ability to sell into China without restriction could accelerate its share gains in a market where Nvidia's presence is shrinking.

Nvidia's China Math

Nvidia's Q1 FY27 results showed the scale of the company's momentum despite the China drag. Data Center revenue hit $75.2 billion, up 92 percent year over year, with networking up 199 percent. Non-GAAP EPS came in at $1.87 versus a $1.77 consensus estimate, the fourth consecutive beat. The company carries $119 billion of supply commitments and $30 billion of multi-year cloud service commitments, with OpenAI committed to 10 gigawatts of Nvidia systems and Meta signing a multigenerational deal across millions of Blackwell and Rubin GPUs.

Bank of America expects Nvidia to report $94 billion to $95 billion in Q2 revenue, roughly $3 billion to $4 billion above the company's own guidance, with Q3 guidance of $107 billion to $108 billion versus approximately $104 billion Wall Street is modeling. Arya's $350 price target implies roughly 56 percent upside from the stock's $223.96 level at the time of the note, with shares trading at about 16 times forward earnings — the lowest valuation in roughly a decade.

The Vera Rubin platform, now in full production after confirmation at GTC Taipei in June, pairs Rubin GPUs with the new Vera CPU. AWS, Google Cloud, Microsoft, and Oracle are preparing deployments, with OpenAI, Anthropic, and SpaceX among the first customers. GPU spot rental prices are near all-time highs — the B200 runs at about $5.66 per hour, the H100 at $2.80, the A100 at $1.64 — evidence that customers can still make money renting compute, which supports continued hardware purchases.

AMD's Different China Calculus

AMD's MI-series accelerators compete without the CUDA software lock-in or NVLink networking that let Nvidia's Data Center Compute grow 77 percent year over year. Broadcom's custom silicon business is strong but remains a components play into a few customers rather than a full-stack platform running a 71 percent gross margin. Amazon's Trainium has become a multibillion-dollar business, yet Nvidia's Data Center Compute still grew 77 percent year over year through it.

The China dynamic is where the two diverge most sharply. Nvidia's H20 sales to China — roughly $4.6 billion per quarter — were effectively erased by export controls. AMD faces no equivalent restriction on its China sales, and with Nvidia's presence shrinking in that market, AMD has an opening to grow share in one of the world's largest AI compute markets.

The risk for Nvidia is not just the lost revenue but the competitive vacuum it creates. Every quarter Nvidia is absent from China's high-end AI accelerator market is a quarter AMD can use to build customer relationships, software stacks, and deployment momentum that could prove difficult to dislodge even if export restrictions are eventually relaxed.

For investors, the divergent China exposure is a key differentiator. Nvidia trades at 44 times earnings with $48.6 billion of quarterly free cash flow and a 75 percent gross margin — the market is pricing in continued dominance. AMD's China optionality, by contrast, is not yet reflected in its valuation, and the company's ability to sell into a market Nvidia cannot access could be the swing factor in the second half of 2026.

This article is for informational purposes only and does not constitute investment advice.