The Nvidia Vera chip is rarely the headline when earnings beat estimates, but it should be. When Nvidia reported Q1 revenue of US$81.62 billion on Wednesday, beating analyst estimates of US$78.86 billion, and guided Q2 at US$91 billion–well above Wall Street’s US$86.84 billion forecast–the numbers did what Nvidia numbers always do: dominate the room. 

But buried in CEO Jensen Huang’s conference call with analysts was something more strategically interesting than another quarterly beat. Huang told analysts that Nvidia’s new Vera central processors unlock access to a US$200 billion market, one that sits entirely outside the US$1 trillion the company has already forecast from its Blackwell and Rubin AI GPU lineup between 2025 and 2027. 

He expects Vera chip revenue to hit US$20 billion by the end of this fiscal year. “I expect (Vera) to be the second largest” sales contributor, Huang said during the call.

That’s not a footnote. That’s a second front.

The Vera chip and the inference pivot

The reason Nvidia needs a second front is straightforward: its biggest customers are building their own. Google, Amazon, and Microsoft–collectively expected to pour more than US$700 billion into AI infrastructure this year, up sharply from around US$400 billion in 2025, are simultaneously pouring funds into custom silicon to run AI models. Intel and AMD are also touting CPUs as a credible play for inference workloads. 

The narrative in the chip industry has shifted from who can train the biggest model to who can serve it cheapest and fastest. Inference is where Nvidia’s GPU dominance is most exposed. Training large models is still firmly Nvidia territory, but inference, generating answers at scale, in real time, is increasingly where custom chips from Google’s TPU line, Amazon’s Trainium and others are making their case.

Nvidia’s answer is Vera. The chip, developed in part using technology from Groq, a startup specialising in inference that Nvidia licensed in a deal reportedly worth around US$17 billion, targets exactly this workload. The full Vera Rubin platform, which combines the Vera CPU with Rubin GPUs, is set to launch later this year.

Supply is already the constraint

Huang was candid about one problem: supply. “My sense is that we’ll be supply-constrained through the entire life of Vera Rubin,” he said on the call. It’s a telling admission for a product Nvidia is positioning as a major growth pillar. To get ahead of disruptions, Nvidia is spending heavily on the supply chain. The company disclosed that its supply commitments rose to US$119 billion in Q1, up from US$95.2 billion the previous quarter, a significant jump that reflects both confidence in demand and anxiety about a global memory chip crunch.

Nvidia also announced a US$80 billion share repurchase programme and raised its quarterly cash dividend to 25 cents per share, from 1 cent, moves that signal financial confidence even as Huang warned of tightening supply.

The question investors are asking

Despite the beats, Nvidia shares fell 1.6% in extended trading after the results. eMarketer analyst Jacob Bourne captured the mood: “Nvidia delivered another beat, but at this point that’s essentially priced in as it keeps beating quarter after quarter. The lingering question is whether it can convince investors the AI buildout has durability into 2027 and 2028, especially as the narrative shifts toward inference workloads and competing silicon from Google, Amazon, AMD, and Intel.”

Huang pushed back with numbers of his own. He pointed to a growing sub-segment of AI-specific cloud customers whose spend is now roughly equal to the hyperscalers, but growing faster quarter-over-quarter. “We should be growing faster than hyperscale capex,” he said.

The Vera chip is central to that argument. Whether the supply chain cooperates is a different question entirely.

(Image source: Nvidia’s Newsroom)

See Also: The Nvidia H200 China deal survived the Trump-Xi summit–just not in the way anyone expected

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President Trump flew to Beijing, brought Jensen Huang along at the last minute, and left two days later, telling reporters that “something could happen” on chip exports. Nothing did. Not a single Nvidia H200 has shipped to China since Trump first authorised the sales in December 2025, and US Trade Representative Jamieson Greer told Bloomberg that semiconductor controls were not even on the bilateral agenda. 

The summit theatre obscured a more interesting development underneath it. The H200 isn’t stuck because Washington won’t allow it. Washington already has allowed it. Roughly 10 Chinese firms, including Alibaba, Tencent, ByteDance, and JD.com, hold approved US export licences for up to 75,000 units each, with Lenovo and Foxconn authorised as distributors. The chips aren’t moving because Beijing won’t let its own companies take delivery.

Two frameworks, one deadlock

The mechanics of the stalemate are worth understanding clearly. US rules require that all H200 chips ordered by Chinese clients be used only in China. Beijing, meanwhile, has instructed Chinese tech companies to limit their use of Nvidia chips to overseas operations while supporting domestic manufacturing. The two requirements are mutually exclusive. 

Chips cleared for export cannot legally be deployed where Beijing wants to deploy them, and Beijing won’t authorise the domestic use the US licences require, according to Implicator.

Commerce Secretary Howard Lutnick stated at a Senate hearing last month that Chinese firms are trying to keep their investment focused on domestic suppliers, including Huawei. Beijing’s State Council has also ordered a supply-chain security review aimed at cutting dependence on US semiconductors. 

The policy contradiction is not accidental. That is the point.

What Huawei gained while diplomats talked

The days around the summit produced several data points that matter more for the long term than Trump’s parting comment. DeepSeek confirmed its latest model had been optimised to run on Huawei processors. Tencent’s chief strategy officer said Chinese GPU supply would increase progressively through 2026, and an Alibaba executive said its T-Head proprietary GPUs had achieved scaled mass production. 

This follows the April launch of DeepSeek V4, which adapted the model for Huawei’s Ascend chips – the first major Chinese frontier model to do so in training, not just inference. What the summit week confirmed is that the shift is no longer experimental. It is now a supply-chain policy. Nvidia’s China revenue has fallen to roughly 5% in recent quarters, down from above 20% before export controls tightened. The company’s own guidance for the current quarter assumes zero revenue from China. 

Huang’s last-minute inclusion in the delegation – Trump called him directly after seeing media coverage that he had not been invited – suggested urgency. The outcome suggested the limits of what CEO diplomacy can achieve when the obstruction is structural, not procedural.

The read for the AI industry

The stalemate matters beyond bilateral optics. Chinese AI platforms are now operating under a domestic mandate to build on Huawei’s compute stack. The question of which AI hardware architecture becomes dominant in the world’s second-largest AI market is being answered not by technical benchmarks but by government directive.

Beijing steering platforms toward Huawei Ascend chips rather than Nvidia H200S is not just a trade posture. It is a structural bet that the performance gap will close fast enough that being locked into the domestic stack is manageable. DeepSeek V4’s results suggest it may be right, at least for inference workloads. 

Trump said something could happen. Greer said the decision is sovereign for China. Both are true, and neither changes the current position: the H200 deal is approved, licensed, and frozen, with Huawei filling the space it leaves behind.

(Image source: The White House)

See Also: Can China’s chip stacking strategy really challenge Nvidia’s AI dominance?

Want to learn more about AI and big data from industry leaders? Check out AI & Big Data Expo taking place in Amsterdam, California, and London. The comprehensive event is part of TechEx and co-located with other leading technology events. Click here for more information.

AI News is powered by TechForge Media. Explore other upcoming enterprise technology events and webinars here.

The post The Nvidia H200 China deal survived the Trump-Xi summit–just not in the way anyone expected appeared first on AI News.