Nvidia's Huang calls black market data centers made of smuggled parts a 'dead end'

During a recent shareholders meeting, Jensen Huang, the CEO of Nvidia, emphasized the company's commitment to prioritizing U.S. national security over commercial interests. He made it clear that any attempt to smuggle Nvidia technology into restricted markets like China would be met with significant challenges due to a lack of support from the company. Huang stated, "National security comes first," highlighting that advanced AI data centers require fully integrated systems with reliable hardware and software support. He warned that attempting to create data centers with smuggled components is fundamentally flawed, referring to such efforts as a 'dead end.' His comments reflect growing concerns among U.S. regulators regarding the potential risks of exporting AI technologies to countries perceived as security threats. Amid these tensions, Anthropic, a company reliant on Nvidia chips, recently halted its advanced AI models following U.S. government directives. Since 2022, Nvidia has been subject to export controls, leading the company to develop region-specific chips that comply with U.S. regulations. While the U.S. government has granted export licenses for certain products, Huang indicated uncertainty about future imports from China, noting that Nvidia has not yet seen revenue from its H200 chip in that market. In terms of financial performance, Huang reported that only 9% of Nvidia's projected revenue for fiscal year 2026 is expected to come from China and Hong Kong, a decline from previous years. He also discussed the impressive return on investment for AI technologies, citing a significant increase in GitHub pull requests attributed to AI usage. Huang asserted that while Nvidia's systems may not be the most affordable, they deliver the best value in terms of cost efficiency and revenue generation. Looking ahead, Nvidia plans to return half of its free cash flow to shareholders through dividends and stock buybacks in the coming years. With over $96 billion in free cash flow expected for fiscal 2026, Huang painted a picture of robust growth and strong financial returns for investors. Shareholders at the meeting also approved the executive compensation plan and re-elected all board members, alongside passing a proposal for simpler majority voting on company bylaws.