NVIDIA

Nvidia’s Q2 earnings beat expectations with a 56% revenue surge to $46.74B and EPS of $1.05. Data center revenue, while growing 56% YoY, slightly missed estimates for the second consecutive quarter. Nvidia forecasts $54B in revenue for the next quarter, excluding potential China H20 shipments. CEO Jensen Huang highlighted the immense long-term AI opportunity, projecting infrastructure spending could reach $3-4 trillion by 2030. Analysts maintain a positive outlook, citing solid growth and consistent performance.

Nvidia CEO Jensen Huang suggests a possible introduction of the Blackwell processor to China, advocating for eased U.S. restrictions. He anticipates a robust 50% growth in China’s AI market. Huang previously sought export licenses for the H20 chip, reaching an agreement involving revenue sharing with the U.S. government. Nvidia may need to modify Blackwell chips to comply with export rules, balancing cutting-edge technology deployment with national security. Despite uncertainties, Nvidia projects strong revenue, highlighting China’s $50 billion potential market value.

Nvidia is set to release its fiscal Q2 earnings, with analysts anticipating $1.01 EPS and $46.02 billion in revenue. Investors are focused on Nvidia’s data center performance, especially demand for Blackwell chips and developments in the Chinese market. Supply constraints for Blackwell racks and the impact of US export controls on H20 sales in China are key concerns. Analysts expect guidance to exclude China, projecting approximately $53 billion in sales for fiscal Q3, a 51% year-over-year increase.

Cambricon, a Chinese semiconductor firm, reported significant revenue and profit growth in the first half of the year, driven by the increasing demand for AI chips. This surge reflects China’s strategic push for domestic AI chip alternatives to Nvidia amidst potential US export restrictions. While Nvidia still dwarfs Cambricon in overall revenue, the Chinese government’s support and diversified sourcing strategies are boosting Cambricon’s prospects. The company is focused on improving its software to compete more effectively. However, export controls pose a challenge to long-term technological advancement.

Nvidia is actively pursuing strategies to maintain its presence in the Chinese market despite potential losses from the halted H20 chip. CEO Jensen Huang confirmed ongoing discussions with the U.S. government regarding exporting a more advanced chip. Reports suggest Nvidia is developing a new AI chip, B30A, tailored for China, potentially exceeding H20’s performance. This follows Huang’s expressed desire to sell more advanced chips there. These efforts come amidst security concerns raised in China regarding potential vulnerabilities in Nvidia chips, which the company denies.

Nvidia is reportedly developing a new AI chip, the B30A, for China, aiming to outperform its current H20 offering while complying with US export controls. Utilizing its Blackwell architecture with a single-die design, the B30A is expected to have roughly half the performance of the B300. Nvidia is also purportedly creating an RTX6000D chip for AI inference in China. These moves reflect Nvidia’s strategy to maintain a presence in the critical Chinese market amid US-China trade tensions and regulatory scrutiny. Samples of the B30A may be sent next month.

A Morgan Stanley report reveals high profitability in AI inference, with average profit margins exceeding 50% for “AI inference factories.” NVIDIA’s GB200 NVL72 leads with a near 78% profit margin, followed by Google’s TPU v6e pod (74.9%) and AWS’s Trn2 UltraServer (62.5%). Huawei’s Ascend CloudMatrix 384 achieves 47.9%. AMD’s MI300X and MI355X, however, show significant negative profit margins due to insufficient token generation efficiency.

Nvidia and AMD have agreed to remit 15% of their AI chip sales revenue in China to the U.S. government in exchange for export licenses. The White House confirmed the arrangement, initiated by the Trump administration, aims to reduce U.S. national debt, which exceeds $37 trillion. Nvidia’s H20 chip is currently the primary product affected. The Treasury Secretary sees this as mutually beneficial, allowing Nvidia to maintain its Chinese market presence while benefiting American taxpayers. This agreement may extend to other companies and sectors in the future.

WSTS forecasts a strong semiconductor market with $180 billion in sales for Q2 2025, a 19.6% year-over-year increase. This marks the sixth consecutive quarter of over 18% YoY growth. Nvidia leads the ranking of top semiconductor companies (excluding foundries and companies like Apple) with a projected $45 billion in revenue. Memory giants Samsung and SK Hynix follow. Nvidia’s stock surge, driven by AI demand, has significantly increased CEO Jensen Huang’s net worth, placing him among the world’s wealthiest individuals.

NVIDIA’s H20 AI chip, designed for the Chinese market, faced export restrictions but received conditional clearance in mid-July, requiring a 15% revenue remit to the U.S. government. Despite this, H20’s future in China is uncertain. NVIDIA defends its H20 exports, emphasizing the U.S.’s need to compete with China in AI and avoid repeating the 5G situation where it lost its leadership position. They believe U.S. AI can become the global standard if the U.S. actively participates in the competition.