Nvidia Corp (NASDAQ:NVDA, ETR:NVD) shares fell over 3% in afterhours trading despite the chipmaking colossus beating revenue estimates and announcing a $60 billion share buyback programme.
Quarterly revenues rose 56% year-on-year to $46.7 billion, beating estimates of $46.2 billion, and gross margin of 72.7% also exceeded forecasts.
While its historical core gaming arm saw revenue rise 49% to $4.3 billion, data centre revenue grew at a similar clip to $41.1 billion, which was very slightly lower than the $41.3 billion forecast.
Guidance for the third quarter was largely in line with expectations at $54 billion versus $53.5 billion, fallingshort of some of the more bullish forecasts on Wall Street that pencilled in as much as $60 billion.
Sales to China remained a "major source of uncertainty", said analysts at Deutsche Bank, as the chipmaker didn’t record any sales of its H20 chips to China in the quarter but said it hopes to ship anywhere from $2 billion to $5 billion of the chips this quarter if it can overcome geopolitical issues.
While the White House allowed a resumption of export licenses for H20 chips to China in return for 15% of the revenue, the company said this plan had not yet been codified.
Kathleen Brooks, research director at XTB, said: “Without positive news about China sales, it is hard to see where the next driver for Nvidia’s share price will come from.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the numbers were "very impressive… Still, they weren’t as gigantic as the most bullish estimates".
The growth rate in data centres slowed sequentially, which "explains why Nvidia’s stock price fell".
Deutsche Bank strategist Jim Reid described the results as a “modest” beat and said the Q3 guidance represents a sales increase of over 50% compared to a year earlier, which "is a clear deceleration from the growth numbers of recent years, when year-on-year sales growth had peaked above 200%".
Views of the results were not all gloomy.
Reid's US colleague Ross Seymore said that while the company did not include China revenue in its guidance, "we believe they could likely benefit from such sales within CY26 and have therefore included this resumption in our out-year estimates".
Reflecting the "underlying strength and China resumption" led to a 15% increase in our revenue and earnings estimates in 2026, causing Seymore to hike his share price target to $180.
Citi’s Atif Malik said AI demand appeared to be “robust”, with Blackwell Data Center revenue up 17% sequentially and that CEO Jensen Huang commented that production of the Blackwell Ultra chip is “ramping up at full speed with extraordinary demand”.
Malik noted that the company has not assumed any H20 shipments to China in the outlook
Some others also said the drop in the shares could offer a more attractive entry point for investors.
Dan Ives, lead analyst at Wedbush, was more upbeat, calling Nvidia "the only game in town" for AI chips and arguing that weakness in the share price should be seen as a "clear buying opportunity".
His view on the China angle was that the Q2 revenue beat was despite a $4 billion decline in H20 sales, while noting the company "now has supply ready to be shipped at some point over the coming quarters when the current geopolitical situation clears up".
"This revenue beat includes a $4 billion decline in China H20 revenue in the quarter while noting the company now has supply ready to be shipped at some point over the coming quarters when the current geopolitical situation clears up."