Source: Sharecast
Revenues rose 56% year-on-year to $46.7bn, and net income surged 59% to $26.4bn, while adjusted earnings per share came in at $1.05, ahead of consensus estimates, while gross margins remained robust at 72.7%.
Nvidia's Q2 gains were driven by continued strength in AI infrastructure demand, particularly for its Blackwell GPU architecture, which saw a 17% sequential increase in data centre revenue. However, total data centre sales of $41.1bn fell short of analyst estimates, reflecting the lingering impact of export restrictions to China and inventory adjustments.
Nvidia also confirmed that it had recorded zero sales of its China-focussed H20 chips in Q2, again citing export restrictions and mounting pressure from Beijing on domestic firms to reduce reliance on US technology. Q3 guidance also excluded any China shipments, raising concerns about long-term access to one of the world's largest semiconductor markets
Nvidia's results also had ripple effects across the broader AI sector, with sentiment cooling slightly as traders reassessed valuations and growth expectations.
XTB's Kathleen Brooks said: "Although Nvidia released another monster earnings report, including a 50% + increase in its revenues YoY, and CEO Jensen Huang said that appetite for AI remains insatiable, analysts’ focus was on China. This is where the company could not deliver since it did not include a forecast for China sales of the H20 chip. China is a big opportunity for Nvidia, but it is also a source of uncertainty, due to political interference on both sides. Although the Nvidia CEO said that revenues from China could top $50bn in the next year, if there is a delay with selling chips into China, it gives China time to develop their own domestic chips, which is an ever-present existential threat to the Nvidia's tech dominance.
"Thus, we could see US chip stocks lag vs. Asian chip stocks on Thursday. A slowdown in Nvidia sales growth is an opportunity for Asian stocks, especially for domestic semiconductors in China. Asia is a major source of AI growth, and if Nvidia is hindered by its political battles, then it gives some breathing space for Asian tech giants."
As of 1340 BST, Nvidia shares were down 0.28% in pre-market trading at $181.10 each.
Reporting by Iain Gilbert at Sharecast.com