Nvidia Stock Tumbles Amid China Uncertainty—But Q2 Earnings Crushed It With Stellar Q3 Guidance
Nvidia's stock takes a hit as China jitters rattle investors—but don't let the headline fool you.
Behind the Noise: Blockbuster Numbers
The Q2 earnings report didn’t just meet expectations—it bulldozed them. Revenue surged, margins expanded, and demand for AI chips remains insatiable.
Guidance That Speaks Louder Than Fear
Q3 projections blew past analyst forecasts, signaling confidence where markets hesitated. Supply chains? Manageable. Global demand? Rocketing.
The China Factor: Overblown or Overdue?
Market nerves over China exposure are real—but Nvidia’s diversification play is stronger than skeptics think. Geopolitical risk? Priced in and then some.
Bottom Line: Weak Hands vs. Strong Fundamentals
Traders panic on headlines—long-term players stack shares on dips. Another day in the casino they call Wall Street.
Image source: Getty Images.
Nvidia's key numbers
| Revenue | $30.0 billion | $46.7 billion | 56% |
| GAAP operating income | $18.6 billion | $28.4 billion | 53% |
| GAAP net income | $16.6 billion | $26.4 billion | 59% |
| Adjusted net income | $17.0 billion | $25.8 billion | 52% |
| GAAP earnings per share (EPS) | $0.67 | $1.08 | 61% |
| Adjusted EPS | $0.68 | $1.05 | 54% |
Data source: Nvidia. YOY = year over year. GAAP = generally accepted accounting principles. Fiscal Q2 2026 ended July 27, 2025.
Investors should focus on the adjusted numbers, which exclude one-time items.
Wall Street was looking for adjusted EPS of $1.01 on revenue of $46.13 billion, so Nvidia exceeded both expectations. It also handily beat its own guidance, which was for adjusted EPS of $0.98 on revenue of $45 billion.
For the quarter, GAAP and adjusted gross margins were 72.4% and 72.7%, respectively.
Platform performance
| Data center | $41.1 billion | 56% | 5% |
| Gaming | $4.3 billion | 49% | 14% |
| Professional visualization | $601 million | 32% | 18% |
| Automotive | $586 million | 69% | 3% |
| OEM and other | $173 million | 97% | 56% |
| Total | $46.7 billion | 56% | 6% |
Data source: Nvidia. OEM = original equipment manufacturer; OEM and other is not a target-market platform. YOY = year over year. QOQ = quarter over quarter.
The data center segment's revenue accounted for about 88% of total revenue, so it continues to drive the company's overall performance.
The data center platform's strong year-over-year and sequential growth was driven by "demand for our accelerated computing platform used for large-language models, recommendation engines, and generative and agentic AI applications," Colette Kress said in her CFO commentary.
Notably, within data center, Blackwell revenue grew 17% sequentially. Blackwell is Nvidia's graphics processing unit (GPU) architecture that is currently in full production.
The other platforms also performed very well. Auto had particularly powerful year-over-year growth. Its growth was driven by "strong adoption of our self-driving platforms," Kress said. The driverless vehicle revolution is advancing -- and Nvidia is the best driverless vehicle stock, in my view.
What the CEO had to say
CEO Jensen Huang stated in the earnings release:
Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap -- production of Blackwell Ultra is ramping at full speed, and demand is extraordinary. Nvidia NVLink rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive orders-of-magnitude increases in training and inference performance. The AI race is on, and Blackwell is the platform at its center.
Guidance for the third quarter
For Q3 of fiscal 2026, which ends in late October, management expects revenue of $54 billion, which equates to growth of 54% year over year. This outlook does not assume any H20 chip sales to China.
Management also guided (albeit indirectly by providing a bunch of inputs) for adjusted EPS of $1.22, or 51% growth.
Going into the report, Wall Street had been modeling for Q3 adjusted EPS of $1.19 on revenue of $52.76 billion, so the company's outlook beat both estimates.
A fantastic quarter and guidance
In short, Nvidia turned in a fantastic quarter and guidance. The stock's modest decline is likely due to short-term traders and will be recovered shortly, in my opinion.
The results were particularly impressive since they did not include any sales of H20 data center AI chips to China due to the U.S. government's export controls spanning the entire quarter. And Q3 guidance was also particularly impressive for the same reason -- it assumes no H20 sales to China. So any H20 chips that are sold to China in Q3 will be icing on the cake.
