Nvidia reported better-than-expected second-quarter results on Wednesday, but the AI chipmaker’s data center revenue fell just short of market expectations as U.S. restrictions on H20 chip sales to China weighed.
NVIDIA Corporation (NASDAQ:NVDA) shares fell around 1% after the Thursday market open. The stock was down at $180.14 as of 09:37 ET.
For the three months ended Jul. 31, the company reported adjusted earnings per share of $1.04 on revenue of $46.7 billion. Analysts polled by Investing.com anticipated per-share income of $1.01 and revenue of $46.1 billion.
Nvidia’s data center unit, which makes up the bulk of revenue and is in high demand to power AI apps, saw revenue jump 56% to $41.1 billion, just missing estimates for $41.34 billion as the H20 chip ban to China weighed.
"There were no H20 sales to China-based customers in the second quarter," the company said. This was after Nvidia was in April restricted by the Trump administration from selling the H20 in China, and only received approval for the move in late-July.
Nvidia Q3 guidance beats, but China outlook muted
Nvidia forecast fiscal 2026 third-quarter revenue of $54 billion, plus or minus 2%, beating estimates of $52.76 billion.
The guidance excludes H20 chip sales to China, the company said, as it faces heightened government scrutiny in China. Despite Nvidia resuming its H20 sales in the country, Beijing was seen promoting the use of locally-sourced chips, while also raising security concerns over Nvidia’s offerings.
Speaking at a post-earnings call, Nvidia CFO Colette Kress said the company had not shipped any H20 chips to China in the current quarter, despite receiving U.S. approval to do so.
"While a select number of our China based customers have received licenses over the past few weeks, we have not shipped any H20 based on those licenses," Kress said.
She added that Nvidia had also not received any official word on the U.S. government taking 15% of the revenue generated from H20 sales to China, as outlined by government officials last week.
Kress said that if geopolitical issues were to subside, Nvidia will ship between $2 billion and $5 billion in H20 revenue in the third quarter. But she also noted that the situation over China remained highly uncertain.
"What makes the $54B October quarter revenue guidance impressive in our view is that there are no H20 revenues built in which we see as potential upside," Piper Sandler analyst Harsh V. Kumar said in a note.
Nvidia CEO Jensen Huang said the company was still attempting to remain competitive in the Chinese market, which he estimated was worth at least "$50 billion of opportunity," if the company were "able to address it with competitive products."
Huang said the opportunity for Nvidia to release its next-generation Blackwell line in China "is a real possibility."
Wolfe Research’s Chris Caso said Nvidia’s guidance was a "touch low" when compared to elevated street expectations. But the results still indicated that the company’s Blackwell line, which is largely expected to be its next big growth driver, remained on track.
Source :
https://www.investing.com/news/earnings/nvidia-q2-results-beat-but-data-center-revenue-just-light-as-china-weighs-4213401
