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How will AI growth and US-China deal shape NVIDIA’s Q2 results?
NVIDIA’s second quarter earnings preview highlights AI momentum, export challenges, and strategic partnerships shaping its global revenue outlook.
When is NVIDIA reporting?
NVIDIA will release its second quarter (Q2) financial year (FY) 2026 results after United States (US) market closes on Wednesday, 27 August 2025 at 10.00pm BST.
Q1 2026 performance highlights demand amid challenges
NVIDIA’s first quarter (Q1) delivered a robust artificial intelligence (AI) narrative with notable caveats. Revenue rose sharply, driven by continued data centre strength. However, new licensing requirements for H20 chip exports to China triggered a $4.5 billion charge, causing gross margins to plunge to 60.5% from the expected 70.6%.
Management highlighted exploding demand for AI services and 'AI factories', with production ramping across major hardware partners and cloud providers globally. Nvidia is deepening partnerships to expand AI capacity while upgrading networking and software capabilities for larger, more sophisticated AI systems.
Q1 FY 2026 financial metrics
Q2 2026 earnings expectations
Analysts expect Q2 revenue of $45.8 billion, representing 52.4% year-on-year (YoY) growth, which is a significant deceleration from previous quarters. NVIDIA’s guidance suggests revenue between $44.1 billion and $45.9 billion.
GAAP net income is forecast at $23.2 billion, marking a 39.6% growth versus the prior year.
Export restrictions on H20 chips will continue impacting Q2 results. While gross margins suffered significantly last quarter, recovery to 71.8% is anticipated as management targets mid-70% margins despite operational headwinds.
Data centre revenue, comprising over 80% of total sales, is projected to moderate from Q1's 73% growth to 54%. Conversely, automotive and robotics segments are expected to accelerate to 80% YoY growth, powered by new products including NVIDIA Halos safety systems for autonomous vehicles and Isaac, the world's first open humanoid robot foundation model.
Q2 FY 2026 financial results expectations
What to watch for
Technology leadership drives aggressive roadmap
NVIDIA maintains its technological edge through a clear, aggressive product pipeline. The latest Blackwell chips power the most demanding AI workloads, with 2025 production sold out months in advance. Blackwell Ultra graphics processing units (GPUs) enter production in the second half of 2025.
The company has unveiled its Rubin architecture for 2026, promising significant performance improvements, followed by Rubin Ultra superchips in 2027. This roadmap demonstrates NVIDIA’s commitment to maintaining a competitive advantage.
Central to NVIDIA’s strategy is the 'AI Factory' concept, integrated systems where raw data enters and processed intelligence emerges. The company provides blueprints and tools enabling organisations and governments to build bespoke, powerful AI systems.
NVIDIA’s product roadmap
Strategic partnerships fuel expansion
NVIDIA announced major 2025 collaborations, reinforcing ecosystem dominance across multiple sectors. Regional AI ecosystems include partnerships with governments and corporations to develop AI capabilities. Notable examples include collaboration with Foxconn and Taiwan's government for a supercomputer factory powered by 10,000 Blackwell GPUs, plus significant deals across Europe and the Middle East, including 18,000 GB300 Blackwell chips for Saudi Arabia's Humain.
In automotive, NVIDIA’s DRIVE platform will power next-generation self-driving features for Toyota and Aurora/Continental vehicles. Healthcare partnerships with IQVIA, Illumina, and Mayo Clinic accelerate drug discovery, genomic research, and digital pathology using AI and accelerated computing platforms.
US government revenue-sharing agreement on China sales
A significant development emerged in August 2025 where NVIDIA and Advanced Micro Devices (AMD) agreed to share 15% of revenues from specific AI chip sales to China in exchange for export licences. This arrangement allows NVIDIA to resume H20 AI chip sales designed for the Chinese market to comply with earlier export controls.
The financial impact warrants attention. While China represents 13% of NVIDIA's revenue by customer billing location in FY 2025, actual contribution may be higher due to trans-shipment orders. Assuming restriction removal doubles China sales while other regions remain flat, this could boost NVIDIA’s revenue by over 10%.
The benefits are expected to outweigh the 15% government levy, which could reduce total revenue by approximately 3% if China’s share of sales rises to 25%.
Revenue breakdown by geography
Potential headwinds
Despite strong momentum, challenges persist. Highly efficient AI models from competitors like China's DeepSeek pose long-term threats to advanced chips demand. Ongoing US-China geopolitical tensions create uncertainty, while the latest revenue-sharing arrangement faces potential legal challenges.
Analyst sentiment remains constructive
Wall Street sentiment has marginally deteriorated since the previous earnings, with 58 of 65 analysts assigning 'buy' or 'strong buy' ratings according to LSEG data, and one 'sell' recommendation. This reflects valuation concerns, with NVIDIA trading at 33 times forward price-to-earnings (P/E).
However, average price targets improved from $163 post-Q1 to $191 currently, adjusting for the recent rally and suggesting approximately 9% upside from current levels.
NVIDIA’s analyst ratings and price targets
Technical analysis
NVIDIA shares rebounded sharply from April's sell-off, more than doubling from lows. While the stock continued to break new highs in late July, a bearish relative strength index (RSI) pattern emerged with weakening momentum at $184 resistance.
Shares dropped below the 20-day moving average (MA) on a 19 August pullback and could retreat towards the 50-day MA support at $165 on disappointing results.
Conversely, better-than-expected earnings could drive prices above $184 resistance towards the ascending channel's upper boundary at $196.
NVIDIA’s daily price chart
- Source: TradingView. The figures stated are as of 20 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.
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