Nvidia beat Wall Street’s lofty targets for the second quarter but disclosed that it recorded no H20 chip sales to China-based customers, a detail that coincided with shares falling about 4% in after-hours trading. According to Fortune, the AI chipmaker’s results underscored strong overall demand for AI infrastructure even as China-related revenue remained absent for H20.
Results surpass expectations amid shifting China outlook
Nvidia reported revenue of $46.74 billion, modestly ahead of Wall Street’s $46.52 billion consensus, per Visible Alpha data cited by Fortune. Profits reached $26.4 billion, up from $18.78 billion the prior quarter, while diluted EPS came in at $1.08 versus projections of $1.02. Gross margins expanded to 72.4% from 61% last quarter.
Data center revenue, the company’s primary growth engine, increased 56% year over year and 5% sequentially to $41.1 billion. The automotive and robotics segment led on a percentage basis with 69% year-over-year growth. Some H20 inventory was sold outside China during the quarter, adding a $180 million benefit to the topline, Fortune reported.
Shares declined nonetheless. “The stock movements are probably just an initial reaction to a so-so number,” Scott Bickley of Info-Tech Research Group told Fortune before the call, adding that it seemed “insane” to label $46.7 billion in quarterly revenue as “so-so.”
Licensing, guidance, and the path for H20 and Blackwell
China licensing and forecast signals
Nvidia has navigated U.S. trade restrictions on H20 shipments to China since April. Fortune noted the U.S. began granting licenses to approved Chinese buyers in July, and Nvidia said some customers received them. However, the company said no H20 revenue to China was included in the second quarter. CFO Colette Kress said on the earnings call, “To date the USG has not publicized a regulation codifying such requirement,” referring to an announced plan that would allow certain AI chip sales to approved Chinese buyers while sending 15% of proceeds to the U.S. government.
Nvidia said it is not including H20 in its current-quarter outlook, though it estimated $2 billion to $5 billion of H20 could be shipped to China if “geopolitical” issues were resolved, according to Fortune. The company reiterated its push for permission to sell its more advanced Blackwell generation in China. “Production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” CEO Jensen Huang said in the release. Michael Smith of Allspring told Fortune that expectations were “sky-high,” margins are rising as Blackwell ramps, China remains an untapped opportunity post–export controls, and a $60 billion buyback adds support.
