Nvidia's CEO Jensen Huang asserts that illicit data centers are a futile endeavor and that national security should take precedence.

      TL;DR: Jensen Huang informed shareholders that national security is the top priority, emphasizing that data centers built with illicit Nvidia chips cannot operate without necessary support. After the annual stockholder meeting, Nvidia CEO Jensen Huang stated that the company would prioritize American national security in cases where commercial interests conflict. He addressed the issue of chip smuggling, asserting that attempts to create AI data centers with stolen Nvidia hardware would ultimately fail. "Advanced AI data centers are large integrated systems requiring reliable hardware, software, networking, and ongoing support," he stated, dismissing the viability of assembling data centers from smuggled components.

      Huang warned that companies trying to illicitly import Nvidia chips into countries with export restrictions, like China, would struggle to activate the hardware due to lack of support and maintenance from Nvidia. He argued that without this continuous cooperation, the systems cannot meet the operating demands of modern AI.

      His comments come amidst heightened enforcement against smuggling. In March, Supermicro co-founder Wally Liaw was charged with conspiring to smuggle Nvidia servers worth approximately $2.5 billion to China using a front company in Southeast Asia, where he reportedly changed serial numbers and created dummy servers to deceive auditors. Liaw has pleaded not guilty, and his trial is scheduled for November.

      In May, Taiwan initiated its first criminal case related to AI chip smuggling after raiding 12 locations and seeking detention orders for three individuals accused of using fake documents to ship Nvidia servers to mainland China. This crackdown has caused the grey-market price of Nvidia’s B300 servers in China to soar to about one million dollars, nearly double the US retail price.

      Huang’s statements follow a recent US government directive for Anthropic to discontinue its most powerful AI models, Fable 5 and Mythos 5, due to national security issues linked to a reported jailbreak. Anthropic, which utilizes Nvidia chips for training, criticized this action as excessive, highlighting the US government’s increasingly assertive stance on sensitive AI technology.

      Nvidia's business with China has consistently declined under export restrictions implemented in 2022. In fiscal 2026, about nine percent of the company’s revenue came from China, including Hong Kong, a decrease from 13 percent the previous year. Although the Trump administration approved sales of Nvidia’s H200 chip to select Chinese companies last year, Huang mentioned that Nvidia has not earned any revenue from those licenses and is uncertain whether China will permit imports.

      On a business note, Huang stated that the question regarding the return on investment in AI "has been answered." He highlighted GitHub, where AI-generated code significantly increased pull requests this year, as evidence that effective AI outputs lead to a greater demand for computational resources.

      "Nvidia systems may not have the lowest purchase price, but they produce the lowest cost tokens, the highest token throughput, and the most revenue," Huang said, noting that Nvidia generated over $96 billion in free cash flow for fiscal 2026 from $216 billion in revenue.

      He reiterated Nvidia's intention to return 50 percent of its free cash flow to investors through stock buybacks and dividends in the coming years. The board approved an additional $80 billion for stock buybacks in May and raised the quarterly dividend from one cent to 25 cents per share.

      During the meeting, shareholders re-elected all ten board members, endorsed the executive compensation plan in an advisory vote, and supported a proposal requiring that all shareholder votes be decided by a simple majority. The company also confirmed PricewaterhouseCoopers as its auditor for fiscal 2027.

      The framing of the "dead end" situation serves a strategic purpose. Huang is reassuring Washington of Nvidia’s commitment to export controls while informing customers in restricted markets that purchasing smuggled hardware is futile. Whether this message effectively reaches the brokers and intermediaries facilitating billions of dollars of Nvidia servers through Southeast Asia remains uncertain.