Nvidia shares fell Tuesday, extending post-earnings declines after the chipmaker topped estimates but offered only a slightly higher outlook, while Alibaba introduced a new in-house AI chip for China. According to Investor’s Business Daily, Nvidia also said it recorded zero second-quarter sales from its H20 chip in China and excluded H20 China sales from third-quarter guidance.
Earnings beat, guidance steady; China H20 absent
Nvidia reported second-quarter earnings of $1.05 per share versus expectations of $1.01, with sales of $46.74 billion topping views of $46.05 billion. The company guided fiscal third-quarter revenue to $54 billion, slightly above the $53.43 billion consensus. Nvidia announced a $60 billion buyback. Shares fell below their 50-day moving average on Tuesday.
Investor’s Business Daily noted Nvidia previously took a $4.5 billion charge in the first quarter and warned of an $8 billion hit to second-quarter sales, as reported by Reuters. The publication also cited The Wall Street Journal reporting that Alibaba has developed a new AI chip capable of several in-house tasks; while more versatile than earlier versions, it remains far less capable than Nvidia’s advanced chips.
Analyst targets rise amid China scrutiny
Outlooks, production moves and licensing deal
William Blair’s Sebastien Naji rated Nvidia outperform with a $205 target ahead of results, Barron’s reported, expecting zero China revenue for the second quarter but anticipating China could lift outlook. Susquehanna’s Christopher Rolland raised his target to $210 from $180 while remaining positive, though he was cautious on H20 revenue in his preview. The Information reported Nvidia asked component makers to halt H20 production for China after the Cyberspace Administration of China sought explanations on potential tracking or remote shutdown; Chief Executive Jensen Huang told The New York Times the chips do not have such capabilities. Reuters separately reported Nvidia may be working on a new China chip that could outperform H20.
Investor’s Business Daily also highlighted Nvidia’s deal securing a license to sell H20 chips in China in exchange for giving 15% of China chip revenue to the U.S. government. Barron’s reported the arrangement could invite scrutiny, citing comments from an international trade attorney and a former BIS senior adviser. AMD also struck a revenue agreement.
Reuters reported Nvidia ordered 300,000 H20 chips with Taiwan Semiconductor in late July, adding to 600,000–700,000 existing inventory, with about 1 million H20s sold in 2024, per SemiAnalysis. Nvidia shares had previously hit an all-time high in August and the company became the first to reach a $4 trillion market cap in July.
