TLDR
- Nvidia reports Q2 earnings Wednesday after markets close, expecting adjusted EPS of $1.01 on revenue of $46.2 billion
- Company faces $8 billion revenue hit from China chip restrictions and new 15% government fee on Chinese sales
- Options traders price in roughly 6% stock movement either way, representing potential $260 billion market value swing
- Data center revenue expected to reach $41.2 billion versus $26.2 billion in prior year period
- Shares up 35% year-to-date and trading near $4 trillion market cap milestone
Nvidia prepares to cap off Big Tech’s earnings season Wednesday when it reports second quarter results after market close. The chipmaker faces heightened scrutiny as investors weigh whether its $4 trillion valuation remains justified.
Wall Street expects adjusted earnings per share of $1.01 on revenue of $46.2 billion. Those figures represent 49% and 53% year-over-year growth respectively.
The numbers mark a slowdown from previous quarters when Nvidia posted triple-digit growth rates. Last year’s second quarter saw 151% EPS growth and 122% revenue improvement.
Evercore ISI analyst Mark Lipacis believes growth may bottom out around 50%. This stabilization could attract momentum investors and drive multiple expansion.
Data center revenue takes center stage with expectations of $41.2 billion versus $26.2 billion last year. Gaming, Nvidia’s second-largest segment, should hit $3.8 billion.
The earnings come after a series of policy changes from the Trump administration regarding China sales. Trump initially banned chip sales to China in April before reversing the decision in July.
China Revenue Impact
The administration now requires Nvidia to pay a 15% cut of Chinese sales to the government. During its first quarter call, management warned of an $8 billion bottom-line hit for the current quarter.
Trump also announced 100% tariffs on semiconductor imports unless companies build domestically. Nvidia should qualify for an exemption from these tariffs.
Options market data reveals traders expect roughly 6% price movement in either direction following results. That translates to approximately $260 billion in potential market value swing.
The implied move sits below Nvidia’s 7% long-term average, suggesting investors have better visibility into performance expectations. Over the past 12 quarters, implied moves averaged 7.7% while actual moves came in at 7.6%.
Chris Murphy from Susquehanna notes that ripple effects on other AI stocks may prove more interesting than Nvidia’s actual movement. Many speculative AI names have declined while Nvidia trades near all-time highs.
Manufacturing and Product Updates
KeyBanc analyst John Vinh reports improving GB200 rack manufacturing yields approaching 85%. Full-year Grace Blackwell rack shipments now track closer to 30,000 units versus previous estimates of 25,000.
Investors will watch for updates on GB200 super chip shipments and the upcoming Blackwell Ultra chip ramp. Commentary on AI spending patterns and China sales strategy will draw particular attention.
Baird’s Tristan Gerra expects strong July quarter results driven by robust GB200 sales. Wedbush raised its price target from $175 to $210 citing positive demand and shipment feedback.
However, Vinh warns that third quarter guidance could disappoint if management excludes direct China revenue from projections.
Nvidia continues developing a new chip for the Chinese market based on Blackwell architecture. The company needs Trump administration approval before launching sales in the region.
Chinese officials recently warned local companies about potential “backdoor” security risks in Nvidia chips. The company denies these allegations and works with Chinese authorities to address concerns.
Shares closed Monday at $179.81, up 35% year-to-date and 40% over the past 12 months. The stock gained 0.3% in pre-market trading Tuesday.
Nvidia became the first company to surpass $4 trillion in market capitalization this July. The milestone underscores the company’s central role in the artificial intelligence boom.
