Nvidia CEO Jensen Huang told shareholders on Wednesday that national security takes priority over commercial opportunities when conflicts arise. Speaking after the company's annual stockholder meeting, Huang stated that smuggling Nvidia chips into export-restricted countries would be a 'dead end' because the company would not provide support or repairs for such systems. The remarks come amid increasing scrutiny from Washington regulators and the Trump administration over AI technology exports to China and other nations, with export controls on Nvidia chips in place since 2022.
Nvidia Refuses Support for Smuggled Systems in Restricted Markets
'National security comes first,' Huang said during the session. He explained that companies attempting to smuggle Nvidia's chips or systems into countries with export restrictions such as China would face challenges getting them operational. 'Advanced AI data centers are massive integrated systems that require trusted hardware, software, networking, and continuing support,' Huang stated. 'Trying to cobble together data centers with some smuggled products is a dead end.'
Earlier this month, Anthropic, which uses Nvidia chips, shut down Fable 5 and Mythos 5 after the U.S. government ordered it to disable access to its most advanced models. Nvidia's chips have had export controls placed on them since 2022, forcing the company to produce China-specific chips that complied with U.S. government benchmarks. Last year, the U.S. cleared the company's H200 chip for export to the region.
China Revenue Represents 9% of Fiscal 2026 Sales
Huang told stockholders that the U.S. government approved licenses for H200 chips, but Nvidia has yet to generate any revenue from them and does not know whether China will allow imports of its products. About 9% of Nvidia's fiscal 2026 revenue came from China, including Hong Kong, a smaller proportion than in 2025 and 2024.
Huang Defends AI Return on Investment
Huang told stockholders during the meeting that the question of AI return-on-investment 'has been answered.' He stated that when AI output is useful, such as generating code, operating an Nvidia system to generate tokens becomes profitable and means companies need more computing power. He noted that GitHub saw pull requests nearly triple this year because of AI. 'Nvidia systems may not be the cheapest to purchase, but Nvidia generates the lowest cost tokens, the highest token throughput, and the most revenues,' Huang said.
Huang reiterated that Nvidia plans to return 50% of the company's free cash flow to investors through share repurchases and dividends over the next few years. Nvidia generated over $96 billion in free cash flow in its fiscal 2026. 'Nvidia offers investors a unique combination of exceptional growth, strong margin, and free cash flow execution, and rising capital returns,' Huang said.
Shareholders Approve Executive Compensation and Board Reelection
At the annual meeting, shareholders approved the company's executive compensation plan in an advisory capacity and re-elected all 10 board members. One outside shareholder proposal to change company bylaws so that all shareholder votes would win with a simple majority passed.
FAQ
What did Nvidia CEO Jensen Huang say about smuggled chips on Wednesday?
Huang stated that smuggling Nvidia chips into export-restricted countries would be a 'dead end' because the company would not provide support or repairs for such systems. He emphasized that advanced AI data centers require trusted hardware, software, networking, and continuing support.
How much of Nvidia's fiscal 2026 revenue came from China?
About 9% of Nvidia's fiscal 2026 revenue came from China, including Hong Kong. This represents a smaller proportion than in 2025 and 2024. Huang noted that while the U.S. government approved licenses for H200 chips, Nvidia has yet to generate any revenue from them.
What capital return plan did Nvidia announce at the stockholder meeting?
Nvidia reiterated plans to return 50% of the company's free cash flow to investors through share repurchases and dividends over the next few years. The company generated over $96 billion in free cash flow in its fiscal 2026.
