NVIDIA’s Earnings Beat Overshadowed by Data Center Miss and China Uncertainty

NVIDIA delivered record revenue of $46.7 billion, surpassing estimates, with adjusted earnings per share at $1.05 versus $1.01 expected. The company projected $54 billion in sales for the next quarter, signaling sustained AI demand. Despite these strong results, the stock fell over 3% in after-hours trading as data center revenue of $41.1 billion narrowly missed forecasts for the second consecutive quarter.

Investor sensitivity to minor shortfalls in NVIDIA's Core data center business was evident, even as year-over-year revenue jumped 56%, driven by cloud giants like Microsoft, Meta, and Amazon. Gaming revenue also surged 49% to $4.3 billion, demonstrating strength beyond AI infrastructure. A $60 billion buyback program failed to offset concerns tied to softness in data center performance and uncertainty around H20 chip sales to China.

Political headwinds complicate NVIDIA's outlook. The Trump administration's ban on H20 chip sales to China cost the company billions earlier this year. While export licenses were granted in July, they come with a condition: Nvidia must return 15% of its China revenue to Washington. CFO Colette Kress confirmed the deal remains unresolved, leaving the company in limbo. Approval could add $2 billion to $5 billion in quarterly revenue.