Nvidia reported a jump in sales of more than 50 per cent on Wednesday but cautioned that uncertainty about sales in China could slow growth this quarter, fanning market jitters that the artificial intelligence boom may be losing steam.
Shares in the world’s most valuable group slid 3 per cent in after-hours trading following its second-quarter results, which also failed to provide guidance about AI chip revenue from China as it navigates geopolitical tensions between Washington and Beijing.
The $4 trillion (€3.4 trillion) tech giant said its revenue was $46.7 billion for the quarter to July 28th, up 56 per cent year on year and slightly above consensus estimates of $46.5 billion, according to Visible Alpha.
Nvidia said it expected $54 billion in sales for the current quarter, plus or minus 2 per cent, compared with expectations of $53.8 billion. While the figure would represent a slowdown from the blockbuster growth of recent years, it does not include China revenue.
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Chief executive Jensen Huang predicted spending on AI infrastructure would only increase in the coming years, even as some investors question whether the pace of investment in chips and data centres is sustainable.
The Trump administration this year blocked exports of the H20 chip, which Nvidia designed for the Chinese market. Nvidia then cut a deal to allow sales to resume in exchange for giving the US government 15 per cent of the revenues. But it is unclear how quickly these sales can recover.
Gene Munster, managing partner at Deepwater Asset Management, said the exclusion of AI chip revenue from China from Nvidia’s financial guidance meant the forecast disappointed some investors’ expectations.
“That $54 billion doesn’t include the H20 – and I was shocked that they didn’t,” he said. Many Wall Street revenue estimates had factored in about $2 billion in additional revenue for the current quarter after the export restrictions were lifted, he added.
Nvidia chief financial officer Colette Kress told analysts the company was waiting for the US government to publish a “regulation” codifying the deal struck this month.
[ Nvidia and AMD to pay US 15% of China AI chip salesOpens in new window ]
If these issues were resolved, Nvidia could ship between $2 billion and $5 billion of its H20 chips to China during the current quarter, Ms Kress said, with a “select number” of Chinese customers having received licences in recent weeks.
The White House did not immediately respond to a request for comment.
Nvidia warned in an earnings filing that its agreement with the Trump administration could also “subject us to litigation, increase our costs and harm our competitive position”. Rival AMD has struck a similar deal.
Beijing has pushed back against Chinese companies using Nvidia chips, adding to the doubts over how much it will sell this year as trade negotiations between Washington and Beijing drag on.
Nvidia said that despite no revenue from the H20 in China during the quarter due to new US export controls, it had managed to sell $650 million of the chips to a customer outside the country.
Its other revenue from customers with billing locations in China, which includes sales of gaming chips, fell by 50 per cent from the previous quarter and was down 25 per cent year on year, to $2.8 billion.
Nvidia’s stock has surged 35 per cent this year as of Wednesday’s close, helping drive gains in the broader market. But the shares have been sensitive to any negative news.
They took a hit last week during a sell-off in companies linked to AI, after a negative report on the technology’s practical applications and comments by OpenAI chief executive Sam Altman about investors overhyping it.
Nvidia’s growth has slowed relative to the astronomical figures it reported at the start of the AI boom two years ago.
Its prospects depend on Big Tech groups such as Google and Amazon continuing their massive spending on AI hardware, alongside smaller cloud companies and governments.
Mr Huang told analysts the spending spree would continue. “The AI race is now on,” he said, adding that just four “hyperscaler” tech companies had doubled their “capex spend ... to $600 billion per year”.
More growth would come as other countries start to catch up to the US, which represents about 60 per cent of the world’s computing power, he predicted.
Nvidia’s net income jumped 59 per cent from last year to $26.4 billion, against forecasts of $23.5 billion. Earnings per share were $1.08, while adjusted gross margin was 72.7 per cent, slightly above consensus estimates of 72.3 per cent.
Nvidia’s board has also authorised $60 billion in share buybacks, up from the $50 billion announced during the same quarter last year.
The roll-out of Blackwell Ultra, the latest generation of hardware using its most advanced Blackwell chips, was “ramping at full speed, and demand is extraordinary”, Mr Huang said.
Nvidia is working on a new chip based on Blackwell for the China market, that is more powerful than the H20 but still not as capable as its most advanced US chips. Mr Trump has indicated that he is open to a similar revenue deal. – Copyright The Financial Times Limited 2025
