Nvidia Corp., now the world's most valuable company, projected quarterly revenue that suggests its growth is cooling after a two-year surge driven by artificial intelligence spending, Bloomberg reported. The NVDA ticker showed 3% drop in after hours over the new uncertainty.
The company said on Wednesday that third-quarter sales will be about $54 billion through October. That figure matched average Wall Street estimates, but some analysts had expected more than $60 billion, according to Bloomberg. The guidance raised concerns that the pace of AI investment may not be sustainable, particularly as Nvidia faces headwinds in China. Although the Trump administration recently eased export restrictions on some AI chips, Bloomberg noted that the policy shift has yet to produce a rebound in sales.
Nvidia shares fell 3% in extended trading following the announcement. The stock had already gained 35% this year, lifting the company's valuation beyond $4 trillion. Chief Executive Officer Jensen Huang rejected suggestions during a call with analysts that demand for AI infrastructure is waning. "The opportunity ahead is immense," Huang said, quoted by Bloomberg. "We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade."
The company's board approved an additional $60 billion stock repurchase program. Nvidia still had $14.7 billion remaining under its previous buyback plan at the close of the second quarter, Bloomberg reported.
For the second quarter, which ended July 27, revenue rose 56% to $46.7 billion, narrowly topping analyst expectations of $46.2 billion. That gain added more than $16 billion year-on-year but marked the slowest percentage growth in over two years. Adjusted earnings per share were $1.05, ahead of the $1.01 forecast.
The data center unit, larger than any other single chipmaker, posted $41.1 billion in revenue, slightly under expectations of $41.3 billion. Gaming sales rebounded to $4.29 billion, beating the $3.8 billion projection. Automotive revenue reached $586 million, slightly short of estimates. The results suggested major data center operators may moderate spending if near-term AI application returns remain uncertain, analyst Jacob Bourne told Bloomberg.
Nvidia's challenges also stem from the US-China technology rivalry. In April, the Trump administration tightened restrictions on exports of advanced processors, cutting Nvidia off from the Chinese market. Washington later eased that ban, allowing some shipments in exchange for 15% of the revenue. But Bloomberg reported that the policy has yet to be fully codified, leaving uncertainty. Beijing has also encouraged Chinese entities to replace US suppliers.
Nvidia said it made no H20 chip sales to Chinese clients in the second quarter, a roughly $4 billion drop from the prior period. Its third-quarter forecast likewise excluded those sales. The company acknowledged legal and financial risks if the US government enforces its revenue-sharing plan. "Any request for a percentage of the revenue by the USG may subject us to litigation, increase our costs, and harm our competitive position and benefit competitors that are not subject to such arrangements," Nvidia said in a filing, quoted by Bloomberg.
Huang said Nvidia could still ship between $2 billion and $5 billion of H20 chips to China this quarter, depending on licensing approvals. Chief Financial Officer Colette Kress told analysts that demand remains high. "If we had more orders, we can bill more," she said. Huang added that Nvidia continues to push Washington to allow exports of its new Blackwell chips. "The opportunity for us to bring Blackwell to the China market is a real possibility," he said, quoted by Bloomberg. "We just have to keep advocating the sensibility of and the importance of American tech companies to be able to lead and win the AI race."
According to Bloomberg, Huang estimated that if more advanced products could be sold in China, Nvidia could tap into a $50 billion market growing 50% annually.
Founded 32 years ago, Nvidia has risen from a niche graphics card supplier to a dominant force in computing. As recently as 2022, it generated less annual revenue than it now earns in a quarter. The company is on pace to book $200 billion this year, with projections topping $300 billion by 2028, or about one-third of the global chip market.
Much of Nvidia's success comes from sales to a handful of hyperscale clients including Microsoft and Amazon, which together account for about half its business, Bloomberg reported. To reduce reliance on these customers, Huang is expanding into software, networking, and complete computing systems. He also pushes Nvidia's engineering teams to speed up innovation cycles.
For now, Nvidia dominates the AI chip market with little challenge. Efforts by rivals such as Advanced Micro Devices and in-house projects by cloud providers have not dented its share significantly. Yet the company remains constrained by supply, since it outsources production mainly to Taiwan Semiconductor Manufacturing Co. Meeting surging demand for its latest technologies continues to be a bottleneck.
