Nvidia projected fiscal third-quarter revenue of roughly $54 billion, matching the average Wall Street estimate but underscoring a deceleration after a two-year surge in artificial intelligence spending. According to Bloomberg, the tepid outlook has stoked concerns about the sustainability of AI investment, even as the company emphasized long-term demand.
Forecast, results, and market reaction
The company’s guidance, which covers the period through October, aligned with consensus but fell short of some projections above $60 billion. Nvidia shares slipped less than 1% to $180.12 on Thursday, though the stock had rallied 35% year to date through Wednesday’s close, lifting its market capitalization above $4 trillion, Bloomberg reported.
For the quarter ended July 27, sales rose 56% to $46.7 billion, topping the $46.2 billion average estimate. It was the smallest percentage increase in more than two years. Adjusted profit reached $1.05 a share versus expectations of $1.01. Data center revenue was $41.1 billion, near the $41.3 billion estimate, while gaming generated $4.29 billion, exceeding projections of $3.8 billion. Automotive delivered $586 million, slightly below expectations.
Analysts largely looked past the guidance, with at least 10 firms raising 12-month price targets by an average of 3% to $202.60, according to Bloomberg’s compiled data.
China headwinds and spending plans
Policy shifts and H20 shipments
Bloomberg noted that difficulties in China continue to cloud Nvidia’s business. While U.S. restrictions on exports of data center processors to Chinese customers were tightened in April, Washington subsequently rolled back some limits, proposing a 15% revenue share on certain shipments. Nvidia said the plan hasn’t been codified and warned in a filing that any such request could lead to litigation, higher costs, and harm to its competitive position.
Nvidia recorded no H20 sales to China-based customers in the second quarter, a decline of about $4 billion from the prior period, and excluded H20 from its third-quarter forecast. The company said $2 billion to $5 billion in H20 chips could ship to China in the current quarter, depending on U.S. licenses, with a few customers already receiving clearance.
Chief Executive Officer Jensen Huang said “the opportunity ahead is immense,” citing a potential $3 trillion to $4 trillion in AI infrastructure spending by the end of the decade. Nvidia also approved an additional $60 billion in stock buybacks, with $14.7 billion remaining under its prior plan at the end of the second quarter. The company continues to urge U.S. approval of a version of its more up-to-date Blackwell chip for sale in China.
