This time, the outlook for the second half of the year and the judgment on the Chinese market by $NVIDIA(NVDA.US) are equally important. Therefore, Dolphin Research will elaborate on these two issues:
In the first quarter of fiscal year 2026 (ending April 27), the company had already sold $4.6 billion (calculated at a 60% gross margin, equivalent to approximately $1.8 billion in inventory value) before the new licensing regulations were issued (April 9). However, the remaining $2.5 billion in sales for the quarter could not be shipped.
When the new regulations were issued, the company provided an estimate of $5.5 billion in inventory and contract impairments on April 16 for the first quarter. However, the actual impairment for the first quarter was only $4.5 billion.
This means that the initial estimate was based on an extremely conservative impairment calculation. In reality, even if H20 cannot be shipped to China, the chips and raw materials may still have value.
In the second-quarter guidance, the company stated that the $45 billion revenue guidance includes approximately $8 billion in revenue loss due to export restrictions to China.
Based on the above data, if we combine the $2.5 billion revenue loss in the first quarter and the $8 billion revenue loss in the second-quarter guidance, it roughly equals $4.2 billion in inventory value, which is almost the same as the $4.5 billion inventory loss recorded in the first quarter.
If the $4.5 billion inventory impairment has fully reflected the impact of H20 inventory and contract losses, it means:
1) After the second quarter, the impact of H20 on the financial statements will be minimal. Meanwhile, there are rumors in the market about a cut-down version of the Blackwell architecture chip specifically for China, belonging to the RTX series. In any case, the worst expectations for the Chinese market have passed, and marginal positives are brewing.
Coincidentally, in the first quarter, sales of the RTX 5060 series gaming laptops based on the Blackwell architecture performed very well.
It’s worth pondering the implications behind the contraction and growth in the data.
2) Looking back at the actual expectations for the second quarter after excluding the impact of H20: most market expectations for H20-related revenue losses were around $3 billion, but the actual figure is $8 billion.
Bloomberg’s sell-side consensus for second-quarter revenue was $46 billion. Considering the $5 billion discrepancy in H20 expectations, the implied growth rate of the Blackwell series GPUs has exceeded market expectations.
Excluding the noise from H20, NVIDIA’s second-quarter guidance is clearly better than expected.
In fact, whether it’s RTX or B300, they are all part of the Blackwell series. Going forward, we should focus on the growth rate of data center GPUs and gaming laptops combined.
The second-quarter guidance also suggests that NVIDIA is about to enter its peak business season in the second half of the year. Accordingly, NVIDIA’s stock price is likely to end its range trading phase and resume an upward trend.
When commenting on the H20 ban, Dolphin Research mentioned that NVIDIA’s stock price would likely not fall below $90-$100 and could potentially rise to $160. This view was criticized by many at the time. After the second-quarter earnings report, Dolphin Research is even more confident in this judgment.
$GraniteShares 2x Long NVDA Daily ETF(NVDL.US)
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