Nvidia and its swollen market cap narrowly topped estimates in results released after the bell on Wednesday.
Jensen Huang was his enthusiastic self. Blackwell, he proclaimed, is what the “world’s been waiting for.”
That’s a real quote. I suppose it’s true, but it nevertheless feels a bit overwrought even in the context of technological epochs. I doubt too many everyday people wake up every morning and say to their significant other, “Darling, if I have to wait another day on Blackwell Ultra I fear I might lose my mind.”
But if that’s you, don’t worry: Jensen’s ramping production of his “exceptional generational leap” at “full speed.” Demand, he enthused, is “extraordinary.”
As for the company’s results, they were extraordinary too on any objective measure. But as ever, it’s difficult to know if Nvidia’s cleared the bar, residing as expectations do above the clouds, in the stratosphere.
Q2 sales of $46.7 billion topped consensus, but only barely. Analysts were looking for $46.2 billion.
The YoY revenue growth rate in the quarter just ended was 56%. That still counts as rapid (particularly considering the base), but it counted as the slowest since Huang’s “quarter heard ’round the world” two years ago.
The current-quarter sales guide was good, but good isn’t necessarily good enough when you’re Nvidia. The company sees $54 billion (plus or minus 2%) in revenue for Q3. That was basically in-line.
If realized, sales growth would be more or less unchanged at 54% this quarter.
Notably, the guide assumes no H20 shipments to China. And none were made in Q2, although the company said it was able to record a $180 million benefit from “the release of previously-reserved H20 inventory” tied to “unrestricted” sales of the chip to “a customer outside of China.”
Investors were keen for any insight into what, exactly, is going on with Nvidia’s China business since Huang successfully lobbied Donald Trump for an export license by — and I’m not sure there’s a polite way to say this — offering to pay the US government for the privilege of shipping semi-obsolete AI chips to Xi Jinping.
Amid a domestic uproar stateside over Nvidia’s offer to pay Trump a share of the company’s China sales, Beijing discouraged Chinese firms, and particularly SOEs, from using the H20, and all but banned it for government applications.
Suffice to say there are more questions than answers regarding the future of the company’s sales into the Chinese market, so Nvidia appears to be taking the most conservative approach possible, where that means simply assuming no sales in China at all. Or at least no H20 sales, and for now that’s the only product Huang’s allowed to sell Xi. (Trump suggested he could be persuaded to allow Nvidia to sell some manner of modified Blackwell to Chinese customers, but details are for now sparse.)
Running through the numbers, Data Center revenue of $41.1 billion was a slight miss. Within Data Center, Compute sales of $33.84 billion fell short of the $35.87 billion consensus, while Networking revenue of $7.25 billion appeared to easily beat. Blackwell Data Center revenue grew 17% in Q2 versus Q1, the company said. Gaming sales of $4.29 billion beat, but that revenue stream’s obviously a sideshow in the AI era.
The non-GAAP gross margin was 72.7%, 60bps better than expected, but more than half of that beat was due to the above-mentioned H20 inventory release. Q2 EPS was $1.04 excluding that item, a few pennies better than consensus. The margin guide — 73.5%, plus or minus 50bps — was a bit better than analysts expected. Non-GAAP expenses for the current quarter are seen at $4.2 billion, a touch lower than the $4.3 billion estimate.
The company said the Board approved another $60 billion in buybacks. Nvidia has $14.7 billion left under the current repurchase authorization quota.
All in all, this report was fine. I doubt it’ll prompt anyone to bid the shares up further given the Data Center miss and the merely in-line current-quarter sales guide, but nothing that I see suggests demand’s anything other than robust for Huang’s products, which makes sense considering he holds a de facto monopoly.
Oh, and while chatting with Fox earlier Wednesday, Scott Bessent said Trump doesn’t have any plans to invest in Nvidia the way he did Intel. After all, Bessent remarked, Nvidia isn’t exactly struggling.
