Nvidia reported another quarter of strong growth on Wednesday in the face of market jitters about demand for artificial intelligence and how its China chip business will navigate geopolitical tensions between Washington and Beijing.
Booming sales of its AI chips have helped Nvidia withstand the hit to its business in China, and propelled it to become the world’s most valuable group by market capitalisation.
Chief executive Jensen Huang predicted spending on AI infrastructure would only increase in the coming years, as some investors question whether the pace of investment in chips and data centres is sustainable.
The $4tn tech giant said its revenue was $46.7bn for the quarter to July 28, up 56 per cent year on year and slightly above consensus estimates of $46.5bn, according to Visible Alpha.
Nvidia said it expected $54bn in sales for the current quarter, plus or minus 2 per cent, better than expectations of $53.8bn.
Despite the solid results, its shares fell 3 per cent in after-hours trading as the report left uncertainty over sales of Nvidia’s AI chips in China unresolved.
The Trump administration earlier 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 still unclear how quickly these sales can recover.
Gene Munster, managing partner at Deepwater Asset Management, said the fact that Nvidia did not include AI chip revenue from China in its financial guidance meant the forecast disappointed some investors’ expectations.
“That $54bn doesn’t include the H20 — and I was shocked that they didn’t,” he said. Many Wall Street revenue estimates had factored in about $2bn in additional revenue for the current quarter after the export restrictions were lifted, he added.
Nvidia chief financial officer Colette Kress told analysts on Wednesday that the company was still waiting on the US government to publish a “regulation” codifying the deal struck earlier this month.
If these issues were resolved, Nvidia could ship between $2bn and $5bn of its H20 chips to China during the current quarter, 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 wider trade negotiations between Washington and Beijing drag on.
Nvidia said that despite there being no revenue from the H20 in China during the quarter due to new US export controls, it had managed to sell $650mn of the chips to a customer outside of the country.
Its other revenue from customers whose billing locations are in China, which includes sales of its gaming chips, fell by 50 per cent from the previous quarter and was down 25 per cent year on year, to $2.8bn.
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 widespread 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 future prospects depend on Big Tech groups such as Google and Amazon continuing their massive spending on AI hardware, alongside smaller cloud companies and governments.
Huang told analysts that 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 $600bn per year”.
The company’s next generation chip — known as “Vera Rubin” — is on track to ship next year. With customers building “ever greater-scale AI factories . . . we’ll be building millions and millions of Rubin GPU platforms”, Huang said.
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.
Global data centre revenue, which relates to Nvidia’s AI chip business, was $41.1bn, slightly under consensus estimates of $41.4bn. The slip was offset by better than expected revenue from its gaming segment.
Nvidia’s net income jumped 59 per cent from last year to $26.4bn, against forecasts of $23.5bn. 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 $60bn in share buybacks, up from the $50bn it announced during the same quarter last year.
The rollout of Blackwell Ultra, the latest generation of hardware using its most advanced Blackwell chips, was “ramping at full speed, and demand is extraordinary”, Huang said.
Blackwell hit technical snags early in its development due to the more complex infrastructure required to run ever-larger racks of interconnected chips.
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. Trump has indicated that he is open to a similar revenue deal.
