Investor Jitters Grow as Nvidia Warns of Cooling AI Chip Demand Amid China Uncertainty
The chipmaker delivered 56% year-on-year revenue growth, reporting $46.7 billion in total sales and $26.4 billion in net income—both outperforming expectations.
Nvidia posted blockbuster second-quarter results, yet investors greeted the news with caution. The chipmaker delivered 56% year-on-year revenue growth, reporting $46.7 billion in total sales and $26.4 billion in net income—both outperforming expectations. Its data center segment, the core engine of its AI-driven success, hit a record $41.1 billion, though slightly shy of forecasts. Despite these stellar figures, shares fell around 2 to 3 percent in after-hours trading as the company’s outlook signaled potential headwinds.
A major point of concern came from Nvidia’s subdued guidance for the coming quarter. The forecast centered on $54 billion in revenue, only slightly ahead of analyst expectations, but notably excluded any revenue projections from H20 chip sales to China. This omission reflected ongoing geopolitical tensions and regulatory pressures, as U.S. export controls and Chinese restrictions continue to complicate Nvidia’s access to its second-largest market.
Company executives, however, remain confident in the long-term AI market. Chief Executive Jensen Huang pushed back against fears of a technology bubble, projecting a massive $3 to $4 trillion in AI infrastructure spending by 2030. He described the AI surge as “a new industrial revolution,” emphasizing that demand remains strong across Nvidia’s latest Blackwell architecture chips and the still-popular Hopper generation. Huang noted that the company recorded a $650 million order from a single non-Chinese customer in the quarter, underscoring global appetite for its technology.
Investor sentiment nonetheless remains mixed, with concerns about a possible AI chip spending bubble weighing on market confidence. Analysts are increasingly drawing parallels to the dot-com boom, warning that a combination of high valuations, heavy capital investment, and rising competition could pose risks. Geopolitical uncertainty around China, which has been a critical growth market for Nvidia, adds to the nervousness, as Chinese tech firms accelerate development of homegrown chips to reduce dependence on foreign suppliers.
Despite these concerns, Nvidia’s influence over the AI market remains unmatched. The company dominates the high-end AI chip segment, powering data centers for hyperscalers, cloud providers, and major corporations worldwide. Its performance is viewed as a key barometer for the AI industry’s trajectory, and the latest results have intensified debate about whether the sector’s meteoric growth is entering a period of consolidation.