Nvidia Surpasses Forecasts, Shares Decline in After-Hours Trading Due to China Export Challenges

Nvidia announced stronger-than-anticipated second-quarter results on Wednesday, solidifying its position as the leading provider of AI semiconductors worldwide.

However, shares plummeted in after-hours trading after the firm revealed no H20 chips were sold to China during the quarter, reigniting fears about export restrictions and geopolitical tensions.

This announcement caused Nvidia’s shares to drop 3.4% to $176 in after-hours trading as investors considered the short-term implications of regulatory changes on a vital market.

For the quarter ending July 27, Nvidia reported a revenue of $46.7 billion, a 6% increase from the previous quarter and a 56% rise compared to the same period last year. Analysts had anticipated approximately $46 billion.

Net profits soared to $26.4 billion, translating to $1.08 per diluted share, whereas adjusted earnings hit $1.05, surpassing a $1.02 consensus.

Sales from data centers, which constituted 88% of total revenue, amounted to $41.1 billion, propelled by a 17% sequential increase in Blackwell chip deliveries.

Nevertheless, the 5% quarter-over-quarter increase did not sufficiently satisfy investors, contributing to additional pressure on Nvidia’s stock.

CEO Jensen Huang remained positive, describing Blackwell as “the AI platform the world has been waiting for,” highlighting expanding adoption among hyperscalers, partnerships with government entities, and sovereign model developers, as stated on Wednesday.

However, this optimistic outlook was tempered by Nvidia’s confirmation of no H20 sales to China during the quarter.

The company stated that it had redirected $650 million in H20 chips, originally designated for China, to a non-restricted customer overseas, releasing a $180 million inventory reserve.

The H20 was previously developed to comply with U.S. export regulations; however, updated licensing requirements enacted in April 2025 have effectively obstructed sales to the Chinese market.

This action followed Washington’s enhancement of AI chip controls, which now necessitate export licenses for high-performance semiconductors intended for China, a policy aimed at limiting Beijing’s access to advanced computing capabilities for military and surveillance purposes.

While the figures indicate ongoing strength in demand for AI infrastructure, the muted stock response suggests that investors are increasingly cautious about macroeconomic threats, particularly the unpredictable trajectory of U.S.-China trade relations.

Looking ahead, Nvidia forecasts Q3 revenue of $54 billion, with gross margins projected at 73.5%.

The board has also sanctioned a $60 billion increase in Nvidia’s share repurchase program as part of efforts to return capital to shareholders. A $0.01 dividend is set for October 2.