Nvidia Reports Slower Growth as China Trade Uncertainty Looms
After several quarters of shattering Wall Street expectations, Nvidia posted July-quarter results on Wednesday that landed largely in line with analyst forecasts. The numbers were strong but not the blockbuster investors had grown accustomed to, sending shares down as much as 3.5% in after-hours trading.
The earnings release also provided a closer look at how President Donald Trump’s shifting trade policies are weighing on the chipmaker, which has become a central player in the U.S.-China technology rivalry. Back in May, Nvidia warned it could lose up to $8 billion in sales due to export restrictions on advanced chips headed to China.
Solid Results, But Momentum Slows
For the quarter, Nvidia reported $46.7 billion in revenue, a 56% increase from a year earlier and slightly ahead of the $46 billion analysts had expected. Net income came in at $26.4 billion, up 59% year-over-year and topping forecasts of $24.7 billion.
While those gains are impressive, they also represent a slowdown from the explosive 122% revenue growth and 168% profit growth reported during the same quarter last year. That tempered pace was enough to disappoint traders, given Nvidia’s sky-high valuation.
“Being on target isn’t enough when a stock is priced for absolute perfection,” said Thomas Monteiro, senior analyst at Investing.com. “Investors were looking for another massive beat, and Nvidia simply delivered solid — not spectacular — results.”
Nvidia’s China Dilemma
Much of the uncertainty surrounds Nvidia’s business in China. The company was once a major supplier to the country, which accounted for about 13% of its revenue last year. But U.S. restrictions blocked sales of its high-end H20 chips to Chinese customers this year.
Although Nvidia received approval in July to restart some shipments, the arrangement requires the company to pay the U.S. government 15% of its China-related chip sales in exchange for export licenses — a first-of-its-kind deal negotiated after CEO Jensen Huang met with Trump.
Even with approvals in hand, shipments stalled last quarter because U.S. regulators have yet to publish final guidelines. CFO Colette Kress noted that Nvidia could generate $2 billion to $5 billion in H20 sales in the next quarter if geopolitical conditions stabilize.
Huang has repeatedly argued that blocking U.S. companies from selling to China could backfire by encouraging local competitors to build rival AI hardware, undermining America’s tech leadership.
AI Growth Still a Tailwind
Despite the trade challenges, Nvidia executives remain bullish. Kress told analysts that the company expects to benefit from $3 trillion to $4 trillion in AI infrastructure investment by 2030, positioning Nvidia as the backbone of global artificial intelligence adoption.
The company forecasted $54 billion in revenue for the current quarter, plus or minus 2%, essentially in line with Wall Street’s consensus. Notably, that guidance does not factor in any potential China-related shipments.
Record Valuation Amid Uncertainty
Nvidia shares have soared more than 30% this year, and in July the company became the world’s first publicly traded firm to hit a $4 trillion valuation. Still, the latest earnings underscore the risks of sky-high expectations and the uncertainty tied to U.S.-China relations.
“The China market represents roughly $50 billion in opportunity this year alone,” Huang said. “It’s the second-largest computing market in the world and home to some of the leading AI researchers.”
For now, Wall Street remains watchful: Nvidia is still the clear leader in AI chips, but slowing momentum, trade barriers, and investor fatigue may test just how long the company can maintain its historic run.