Nvidia delivered a strong second-quarter performance for fiscal 2026, reporting $46.7 billion in revenue, a 56% increase year-over-year. The company's earnings topped Wall Street expectations, showcasing continued demand for its AI and data center products.
Despite this, Nvidia's shares fell 3% in after-hours trading as investor concerns brewed over a potential slowdown in artificial intelligence-related growth. The guidance for third-quarter sales of $54 billion came below some analyst estimates exceeding $60 billion.
What were Nvidia’s key earnings highlights in Q2 2026?
Nvidia's data center division, which accounts for 88% of total revenue, saw sales rise 56% to $41.1 billion. However, revenue from data center computing declined 1% sequentially, largely due to a $4 billion reduction in H20 chip sales to China, reflecting trade restrictions.
The company realized $180 million from previous H20 inventory releases and $650 million in unrestricted H20 sales outside China. CEO Jensen Huang remains bullish on China as a $50 billion opportunity, forecasting 50% annual growth.
Did you know?
Nvidia's data center division, the core revenue driver, contributed 88% of Q2 sales, totaling $41.1 billion.
How have trade tensions and China restrictions affected Nvidia?
The shifting trade policies under the Trump administration have created market uncertainties. Initially, H20 chip exports to China were banned, later softened to a 15% revenue payment arrangement following CEO Huang’s negotiations with the U.S. government.
Despite this, no significant H20 chip sales to China occurred in the quarter, complicated further by China's advisories against domestic purchases of H20 chips amid national security reviews.
ALSO READ | ByteDance surpasses Meta in quarterly revenue, valued above $330B
What are the market’s concerns about AI growth slowing?
Doubts about the sustainability of rapid AI investments fuel investor jitters. OpenAI CEO Sam Altman has commented on market “overexcitement,” and surveys show many AI pilots failing to yield substantial revenue.
This backdrop softened enthusiasm for Nvidia despite its strong earnings, with questions raised about whether AI spending is nearing a bubble.
How is Nvidia positioning itself amid cautious investor sentiment?
Jensen Huang remains confident, projecting $3 trillion to $4 trillion in AI infrastructure spending through the decade. He emphasizes that the current phase represents a new industrial revolution, characterized by an intensifying race in artificial intelligence.
Nvidia continues to innovate and expand, readying the market for new AI products despite near-term uncertainty, positioning itself for long-term growth as AI adoption broadens.
Comments (0)
Please sign in to leave a comment