Nvidia investors, long accustomed to stellar forecasts, faced a dose of uncertainty after the chipmaker left China-related sales out of its latest outlook.
The Nvidia stock slipped about 2% in premarket trading on Thursday, despite the company beating Wall Street estimates and signalling continued strong growth ahead.
The absence of projected revenue from its H20 chips in China—one of the world’s most critical semiconductor markets—cast a shadow over what otherwise looked like another record-setting quarter for the Silicon Valley giant.
Chief Executive Jensen Huang underlined the scale of the opportunity, noting that China alone could represent as much as $50 billion in potential sales this year if the firm were able to fully access the market.
Revenue climbs 56% but data centre sales miss raises questions on AI demand growth
For the second quarter, Nvidia reported revenue of $46.7 billion, up 56% from the same period last year.
Its data centre division, which has become the backbone of its AI chip dominance, generated $41.1 billion in sales.
The figure was just short of analyst expectations, according to Visible Alpha data, and prompted questions about whether demand from cloud providers is showing early signs of slowing.
Looking ahead, Nvidia forecast revenue of $54 billion for the current quarter, above Wall Street estimates of $53.8 billion.
Analysts noted that the forecast explicitly excluded potential contributions from H20 shipments to China, which some had factored into their models.
US-China trade war casts long shadow
Nvidia has found itself at the centre of the technology trade tensions between Washington and Beijing.
The Trump administration temporarily restricted exports of the H20 chip, designed to comply with US rules governing sales to China, before later easing the restrictions.
However, officials have indicated that 15% of any revenue from licensed shipments may be directed to the US government.
The uncertainty has left investors and analysts speculating about how much momentum Nvidia can sustain in the absence of Chinese sales.
Jensen Huang said the Chinese market could grow by 50% annually, underscoring the scale of the opportunity at stake.
Analysts weigh in on outlook
Market watchers expressed a range of views on the results and outlook.
Paul Meeks of Freedom Capital Markets said he was encouraged by Nvidia’s forecast, which came in strong even without China shipments.
“The stock likely ran too far too fast into the print,” he said, adding that he expects a “dumbed down” version of the chips may ultimately be allowed as part of trade negotiations.
Jay Goldberg of Seaport Research Partners pointed to weaker-than-hoped growth in data centre sales, calling the results a concern given Nvidia’s elevated market position.
“These results are good for a normal company in normal times, but Nvidia is neither,” he said.
Gil Luria of D.A. Davidson argued that guidance disappointment stemmed entirely from excluding China, while Bob O’Donnell of Technalysis Research suggested that the modest miss in data centre revenue could be an early signal of a slowdown in AI infrastructure build-out.
Meanwhile, Richard Clode of Janus Henderson Investors said the debate now shifts to the durability of Nvidia’s growth.
“At this cadence, we’re going to get there fairly quickly,” he said of the company’s path to a trillion-dollar annualised run rate.
Can Nvidia’s m-cap touch $5 tn by 2026?
Despite the trade overhang, many analysts remain bullish on Nvidia’s long-term prospects.
Wedbush analysts called the quarter “another validation of the AI revolution” and reiterated that the broader chip landscape remains dominated by Nvidia.
The firm said any stock pullback should be seen as a buying opportunity, noting that Nvidia’s market capitalisation could approach $5 trillion by early 2026.
The debate over whether Nvidia can continue its rapid climb now hinges on how quickly Chinese sales can resume and whether demand from hyperscalers and enterprises remains as strong as expected.
For now, the company has once again delivered on revenue growth, but investors are left questioning whether the AI boom can withstand the pressures of geopolitics.
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