Nvidia beat Wall Street forecasts for Q2 and issued strong guidance, but the absence of China chip sales has weighed on investor sentiment.
Stronger-than-expected second-quarter results were reported by Nvidia on Wednesday, extending its run as the world’s dominant supplier of AI semiconductors.
Yet, shares tumbled in extended trading after it was confirmed by the company that no H20 chips were sold to China during the period, reviving concerns over export restrictions and geopolitical risk.
The disclosure sent Nvidia’s shares down 3.4% to $176 in after-hours trading, as the near-term impact of the regulatory backdrop on one of its key markets was weighed by investors.
Revenue for the three months ended July 27 rose to $46.7 billion, Nvidia reported, up 6% from the prior quarter and 56% higher than a year earlier. Approximately $46 billion was expected by analysts.
Net income surged to $26.4 billion, or $1.08 per diluted share, while adjusted earnings reached $1.05 a share, with a $1.02 consensus being exceeded.
Data center sales, which accounted for 88% of total revenue, hit $41.1 billion, boosted by a 17% sequential gain in Blackwell chip shipments.
Still, the 5% quarter-over-quarter jump did little to appease investors, adding to pressure on Nvidia’s stock.
CEO Jensen Huang remained upbeat, labeling Blackwell “the AI platform the world has been waiting for,” and pointed to growing adoption across hyperscalers, government partnerships, and sovereign model developers, according to a statement on Wednesday.
Nvidia Confirms Zero H20 Chip Sales to China This Quarter
But the bullish tone was tempered by Nvidia’s confirmation that no H20 sales to China were recorded during the quarter.
The company revealed that $650 million in H20 chips, initially intended for China, had been diverted to a non-restricted customer abroad, unlocking a $180 million inventory reserve.
The H20 was previously designed to comply with U.S. export rules, but updated licensing requirements imposed in April effectively hindered sales into the Chinese market.
Washington’s tightening of AI chip controls now requires export licenses for high-performance semiconductors destined for China, a policy move aimed at curbing Beijing’s access to advanced computing power for military and surveillance use.
While the numbers suggest continued strength in AI infrastructure demand, the muted stock reaction indicates that investors are becoming increasingly sensitive to macroeconomic risks, particularly the uncertain trajectory of U.S.-China trade policy.
Looking ahead, Nvidia expects Q3 revenue of $54 billion with gross margins forecast at 73.5%.
A $60 billion expansion of Nvidia’s share repurchase program has also been approved by the board in a bid to return capital to shareholders. A $0.01 dividend is scheduled for October 2.
