Hi-tech quarterlies

Nvidia, revenues above estimates at EUR 46.7 billion. Share price falls in after-hours trading

Overnight the chip star released its second quarter 2025-2026 figures. $60 billion buyback approved.

by Vittorio Carlini

27 August 2025

5' min read

Key points

The Expectations.
China Node
The Taiwanese node

5' min read

The wait is over. Nvidia released its figures for the second quarter of the 2025-2026 financial year. Revenues, despite all the China-related problems, were $46.7 billion, above analysts' expectations. Earnings per share were $1.05. GAAP and non-GAAP gross margins, for their part, decreased from a year ago. This is because revenues related to Blackwell's latest technology are mainly derived from large-scale data centre systems, whereas in the same period last year they were driven by the (less advanced) Hopper Hgx systems. On a sequential basis, however, gross margins (both GAAP and non-GAAP) increased, as the prior quarter included a $4.5 billion charge related to excess inventory and H20 chip purchase obligations.

The Outlook

With reference to the outlook for the third quarter of 2025-2026, revenues are expected at USD 54.0 billion, with a possible variance of ±2%. No H20 shipments to China are included in the outlook. GAAP and non-GAAP gross margins are estimated at 73.3% and 73.5% (±50 basis points), respectively. GAAP and non-GAAP operating expenses are forecast at approximately $5.9 billion and $4.2 billion respectively. Finally, the group approved an additional $60bn buy back.

As usual, outlook assessments differ depending on which analyst panel is considered. According to Reuters, the outlook for the third quarter is better than expected. Other sources, on the other hand, indicate that there is disappointment because the growth forecast would not be sufficient and this raises fears that demand for artificial intelligence is slowing down. What is certain is that the stock is down in after hours trading. Here too, however, one has to be careful. The market's immediate reaction is not always dictated by its assessment of the data. Speculative movements in options or by ultra-fast traders may intervene.

The options

The expectations, however, were many. Options traders in particular were prepared for big movements on the stock exchange after the accounts. According to Reuters, the market was expecting a movement of up to $260-270 billion in capitalisation in either direction at the end of today's quarterly report. In fact, options indicated a possible 6% swing for the stock, slightly below the historical average of 7%. Bloomberg points out that this is the lowest expected post-earnings volatility since Q1 2023-2024, published in May 2023. These numbers, however, signal how high the expectation was for the Artificial Intelligence star's numbers.

Business dynamics

More specifically, with reference to the various areas into which revenues are divided, it should be noted that the Data Centre segment (the largest) recorded a turnover of USD 41.1 billion. This figure is up 56% from a year ago (+5% over the previous quarter). The increase, both year-on-year and sequentially, was driven by demand for the accelerated computing platform, used in large language models, recommendation engines, and generative and agentic artificial intelligence applications.

With regard to the Gaming segment, again in the second quarter, revenues increased by 49% year-on-year (+14% over the previous quarter), supported by strong sales and increased availability of Blackwell architecture-based products.

Finally, the two areas of Professional Visualisation and Automotive. In the first case, sales rose 32% year-on-year and 18% compared to the previous quarter. In the latter, sales jumped 69% year-on-year and 3% compared to the previous quarter. The momentum was driven by increased adoption of platforms for autonomous driving.

The China issue

One of the nodes, apart from the fact that in the current release of numbers the problem seems momentarily bypassed, remains of course China. The story has a long history and has had important recent developments. While Joe Biden was still in the White House, the US company was banned from exporting the Hopper family's 800 solutions to Beijing. In response, Nvidia developed a simplified version - the H20 - of the microprocessor for Artificial Intelligence (Ai).

However, with the arrival of 'The Donald' in the Oval Office, Hopper 20 also ended up in the cauldron of products banned for sale to the former Middle Kingdom. Surprisingly, however, the ban was lifted, leaving Nvidia free to obtain licences to resume exports of the H20 as part of negotiations on trade in rare earth elements. All's well that ends well, then? No laughing matter. As is his wont, the current US president has again shuffled the cards. In a recent meeting with Nvidia's CEO Jensen Huang, America only authorised sales on condition that the company (like AMD) ceded a 15% share of the revenues from chips sent to China to the government. Not only that. Not to be outdone, Beijing urged local companies - such as Tencent, ByteDance and Baidu - to avoid using H20, citing potential security risks. In such a scenario, it is the story of these days, the US group - on the one hand - has ordered its suppliers (including Tsmc, Amkor and Samsung) to suspend production of H20. And on the other hand, it is working on a next-generation chip based on the Blackwell architecture (codenamed B30A), designed as a successor to the H20. The new processor, less powerful than the top models, is awaiting approval by the US government for export to China. But, given the context, who knows whether 'The Donald's' OK will come.

The Taiwan Node

But it is not just a question of China. Or, rather, of exports to China. There is also the question of Taiwan. The group, it should be remembered, is 'fabless'. That is, it relies on third parties for the production of processors. Among these is Tsmc . As is well known, the company - notwithstanding the push for geographical diversification (new plants, for example, in the USA) - is essentially active in Formosa. That is: the island at the centre of the bitter dispute between the US and China. In such a context, there is a risk that problems may arise on the supply chain front. In 2024-2025, according to Bloomberg terminal, 15.7% of Nvidia's revenues were generated in Taiwan. True, the group has reduced its dependence on production located on the island. In 2016, for instance, this amounted to 36.8% of the total. Moreover, Tsmc is still a supplier to many other large technology companies. Thus, the sword of Damocles hangs somewhat over the entire industry. Having said that, however, the underlying problem also remains for the Californian company.

Beyond that, the global demand for chips remains high. True! There are the challenges brought by low-cost artificial intelligence such as DeepSeek. In addition, China has embarked on a massive microchip development plan to keep up with the current dominance of star-studded technology. That said, however, Artificial intelligence is a revolution and it is here to stay. If the market, given the high multiples of the stocks involved in the Ia gold rush, sells off the shares as soon as they get off the steep path of expected growth...well that's another story.

Vittorio CarliniRedattore
Luogo: Milano
Lingue parlate: Italiano, Inglese
Argomenti: Finanza, Tecnologia, Analisi fondamentale
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