Nvidia stock fluctuated on Thursday as investors digested the company’s latest earnings report, which signaled robust AI demand but provided little clarity on China.
Sales surged 56% in the quarter to $46.74 billion, which was roughly in line Wall Street’s projected $46.06 billion, according to LSEG. The company reported adjusted earnings per share of $1.05, just topping the $1.01 per share estimated by analysts.
The better-than-expected results were clouded by concerns over Nvidia’s future in China.
“There was more noise around this quarter and the guidance and what’s implied than I can remember ever on an Nvidia quarter, let alone on any other megacap tech company,” said Deepwater Management’s Gene Munster. “Of course, a lot of that noise is related to all the mechanics around China.”
In April, the Trump administration blocked Nvidia from selling its H20 chip in the market.
In August, Nvidia CEO Jensen Huang struck a deal with President Donald Trump to restart sales to China by agreeing to give 15% of sales in the region to the government. That deal has not been finalized.
The market could be a $50 billion opportunity for Nvidia, growing 50% per year, Huang said in a call with analysts Wednesday, while adding that there’s a “real possibility” Nvidia can sell its advanced Blackwell processor there.
But the fate of its H20 chip, which was made specifically for China, remains up in the air.
Management said that Nvidia could ship between $2 billion and $5 billion in H20 revenue during the third quarter if the geopolitical environment permits.
Nvidia said it expects revenue this quarter to be $54 billion, plus or minus 2%, though that number doesn’t include any H20 shipments to China. Analysts were expecting revenue of $53.1 billion, according to LSEG.
Data center revenue of $41.1 billion in Q2 came up short of estimates for the second straight period, but still grew 56% over the year prior. The segment was up 5% over Q1, slowing from the prior quarter when data center revenue grew 10%.
For Nvidia bulls, there was still plenty of reason for optimism.
On a post-earnings conference call with investors, Huang said AI has made “tremendous progress” in the last year and that the build-out of AI infrastructure is still in its early stages.
“As the AI revolution went into full steam, as the AI race is now on, the capex spend has doubled to $600 billion per year,” he said. “There’s five years between now and the end of the decade, and $600 billion only represents the top four hyperscalers.”
Huang projected $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade.
“The opportunity ahead is immense,” he added.
Benchmark analysts said in a Thursday note that Nvidia’s guidance was “only modest upside to an elevated Street consensus,” but overall the report showed “solid sequential and annual growth.”
“We believe Nvidia’s results are consistent with its previous objectives and are in no way indicative of a slowdown in industry-wide AI interest or investments,” the analysts, who have a buy rating on Nvidia’s stock, wrote in a note to clients.
The results showed that the “playbook remains the same” for Nvidia, JPMorgan analysts wrote.
“A solid beat and raise with multiple levers at play to drive upside, against the backdrop of a multi-year runway of growth for AI infrastructure spending, with NVDA in our view continuing to capture a significant majority of incremental spend (as it has over the past ~3 years),” the analysts said.
Nvidia 1-day stock chart.