Strong NVIDIA earnings overshadowed by export and valuation issues

NVIDIA’s earnings beat expectations

NVIDIA's highly anticipated earnings, released after the market closed this morning, were met with a tepid response from investors, despite exceeding expectations.

The artificial intelligence (AI) chip leader reported second quarter (Q2) fiscal year (FY) 2026 revenues of $46.7 billion, surpassing the $46.1 billion forecast. This marked a 6% increase quarter-over-quarter (QoQ) and a 56% increase year-over-year (YoY), indicating nine consecutive quarters of over 50% annual growth since the generative AI boom began in mid-2023.

NVIDIA reported earnings per share (EPS) of $1.05, beating the expected $1.01. Gross margins rose to 72.4% from 71.3% in the previous quarter.

Notably, NVIDIA’s data centre revenue reached $41.1 billion, just shy of the expected $41.34 billion, representing a 62% YoY increase driven by soaring demand for its Blackwell AI chips.

Impact of US export restrictions on China sales

However, there were no sales of H20 chips to China-based customers in the quarter due to United States (US) export restrictions, leading to an anticipated $8 billion revenue shortfall for the current quarter. The company forecast third-quarter (Q3) revenue at $54 billion, plus or minus 2%, slightly above Wall Street’s estimate of $53.4 billion.

However, the lack of sales to China, combined with elevated investor expectations, crowded positioning, and a lofty valuation, resulted in NVIDIA’s share price falling 3.1% in after-hours trading to $176.05.

Market reaction and broader industry impact

Jensen Huang, the charismatic founder and chief executive officer (CEO) of NVIDIA, remained optimistic, stating, 'The AI race is on, and Blackwell is the platform at its centre.' Huang emphasised the 'extraordinary' demand for Blackwell, highlighting production efforts to meet orders from hyperscalers such as Microsoft, Meta, and Amazon, as well as emerging AI-native startups.

The broader market also felt the impact of NVIDIA’s report, with Nasdaq futures falling 124 points (-0.53%) to 23,505. AI-related stocks like Super Micro Computer and Advanced Micro Devices (AMD) dipped around 2% in after-hours trading in sympathy.

NVIDIA technical analysis

NVIDIA’s share price gained 35% in 2025, building on its 171% gain in 2024. As shown in the chart below, the stock has followed an ascending channel from the $86.62 low it reached in April during the Liberation Day sell-off to last week's high of $184.48.

Trend channel support is viewed at $173 and is reinforced by last week's $168.80 low. Provided its post-earnings report pullback remains contained by those support levels, the uptrend remains intact, with expectations of a retest and break of the $184.48 record high.

NVIDIA daily candlestick chart

• _{Source: TradingView. The figures stated are as of 28 August 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}