Nvidia shares dip as chipmaker’s earnings come in good — but not amazing

Nvidia reported quarterly earnings that exceeded analyst expectations, but its shares declined in after-hours trading as investors expressed concerns over slowing growth and geopolitical uncertainties. The chipmaker’s revenue for Q2 FY2026 was $46.74 billion, up 56% year-over-year and slightly above estimates, while net income rose 59% to $26.42 billion. Despite the beat, Nvidia’s stock fell about 3-4% post-announcement, primarily due to data center revenue of $41.1 billion missing the $41.34 billion forecast. This shortfall was partly attributed to a $4 billion reduction in H20 chip sales impacted by U.S. export controls on China. Nvidia had previously warned of an $8 billion revenue hit from these restrictions. Geopolitical tensions are a key factor, as Nvidia sold no H20 chips to China during the quarter, a market that once accounted for 13% of sales. However, the company released $180 million in reserved H20 inventory to a non-China customer. Nvidia is navigating shifting trade policies under the Trump administration, which recently allowed potential resumption of sales with a 15% fee to the U.S. government. Growth has slowed from the hyper-speed of previous quarters; year-over-year revenue increase was 56%, down from 122% a year ago, indicating market maturation. CEO Jensen Huang remains bullish, projecting $3-4 trillion in AI infrastructure spending by 2030. Nvidia’s data center business, driven by GPUs, continues to lead, with Blackwell chip sales up 17% sequentially. The company faces broader industry concerns about an AI bubble, echoed by OpenAI’s Sam Altman, and most companies not profiting from AI implementations. Nonetheless, large cloud providers like Meta, Alphabet, Microsoft, and Amazon are heavily investing in AI infrastructure, sustaining demand for Nvidia’s products. Nvidia’s board approved an additional $60 billion for share repurchases, following $9.7 billion bought back in the quarter. Guidance for Q3 is revenue of $54 billion, ±2%, in line with estimates but assuming no China shipments. If geopolitical issues ease, Nvidia could ship $2-5 billion in H20 revenue to China. In conclusion, while Nvidia’s fundamentals remain strong, investor caution over growth pace and trade dynamics has led to a temporary stock dip, highlighting the volatile interplay between technology and geopolitics in the AI era.