Nvidia’s upcoming Q2 earnings report is poised to make waves, as investors eye the impact of China chip rules, AI demand, and $8 billion in lost sales.
Key Takeaways
- Nvidia reports Q2 earnings on Wednesday with expectations of $46.2 billion in revenue and $1.01 EPS.
- The company forecasts an $8 billion revenue hit due to U.S. export restrictions and a new 15% sales fee on China shipments.
- Despite headwinds, data center revenue is projected to surge to $41.2 billion, with continued strength in AI chip sales.
- Nvidia stock has climbed 35% year to date, reaching a market cap of $4 trillion and currently trades at $181.04.
What Happened?
Nvidia is set to announce its second-quarter results, marking two years since the AI boom began redefining its business. The report follows turbulent regulatory changes from the Trump administration, which has reshaped Nvidia’s China strategy and investor expectations. Analysts are watching closely as the world’s most valuable chipmaker tries to balance explosive AI growth with rising geopolitical and economic pressures.
Q2 Numbers Under the Microscope
Analysts expect Nvidia to post:
- $46.2 billion in revenue
- $1.01 in adjusted EPS
This reflects a 53% increase in revenue and 49% EPS growth year over year. However, this growth is slower compared to the triple-digit surges Nvidia experienced in 2023 and 2024. The anticipated $8 billion shortfall due to the China chip restrictions remains the biggest drag on results.
Options traders are pricing a 6% move in Nvidia’s stock, signaling the potential for a $260 billion market cap swing based on the earnings report.
China Revenue Woes and the Trump Deal
Earlier this year, the Trump administration initially banned Nvidia chip sales to China, before reversing course in July. In August, a new 15% sales cut was imposed on any chips sold to China. Nvidia CEO Jensen Huang reportedly negotiated this down from an initial 20%.
- Nvidia will pay 15% of China-related chip sales to the U.S. government.
- The company did not include China H20 chip sales in Q2 guidance.
- Analysts expect Nvidia to exclude H20 from future forecasts due to ongoing Chinese government pressure to buy domestic chips.
The H20 chip alone could have added $8 billion in Q2 sales. Its omission from guidance underscores Nvidia’s cautious stance on Chinese revenue moving forward.
AI Boom Powers Data Center Demand
Nvidia’s transition from gaming GPUs to AI infrastructure dominance is now fully entrenched. The company projects:
- $41.2 billion in data center revenue this quarter, up from $26.2 billion last year
- $3.8 billion in gaming revenue, its second largest segment
Nvidia’s Blackwell line, especially the GB200 and upcoming Blackwell Ultra, continues to drive demand from hyperscale clients like Microsoft, Google, Amazon, and Meta. The company said the new Blackwell products hit $27 billion in sales, comprising 70% of data center revenue. Full-year Grace Blackwell rack shipments are now forecast at 30,000 units.
Market Influence and Risks
Nvidia’s performance is now considered a market bellwether for the broader AI trade. As S&P Global’s Melissa Otto put it, “The assumptions and performance of Nvidia really dictates what the market is going to start to price into the AI trade.”
The chipmaker represents 7.5% of the S&P 500, with stock up 12x since 2022. Its gains reflect AI’s central role in tech investing but also expose it to volatility if expectations aren’t met.
CoinLaw’s Takeaway
In my experience, Nvidia is the heartbeat of the AI gold rush. But the same turbocharged expectations that made it a $4 trillion giant also leave it vulnerable. The China policy whiplash, the delicate H20 situation, and gargantuan AI spending plans all point to a company walking a tightrope. I found it fascinating how Wall Street is holding its breath over one earnings report. If Nvidia delivers a strong “beat and raise,” the AI party keeps going. But if it disappoints, it might shake the entire market. This is not just a chip story anymore. It’s a proxy for AI’s future.
