Nvidia Beats Second Quarter Estimates But Stock Falls Due to Data Center Revenue

Nvidia, the world's most valuable company, reported earnings yesterday, with all of Wall Street observing closely to see how AI markets will move in the coming months.

Nvidia released Q2 2026 earnings after the bell at 4 pm EST yesterday, reporting record-breaking revenue and significant growth from the previous quarter. Analyst expectations for the business are extremely high due to its position has the world's most valuable company, and Nvidia proved that the AI industry is still going strong.

Revenue for the second quarter was reported at $46.7 billion – a 6% increase from Q1 and a 56% increase from last year – which just beat analyst expectations of $46.52 billion. Meanwhile, profits were reported to be $26.4 billion, which increased by a staggering $40.8% from last quarter. Additionally, diluted earnings per share, or EPS, increased to $1.08, beating predictions of $1.02, and Nvidia's gross margins – a measure of their profit from their products after subtracting the direct costs to manufacture the product – grew to 72.4%, skyrocketing from 61% in Q1.

So why is the stock falling? Due to US President Donald Trump's administration, Nvidia was banned from selling its H20 chips to China for the entire quarter, and licenses for specific Chinese companies to purchase Nvidia chips were just approved by the US government. Furthermore, Trump announced that Nvidia and AMD had agreed to a deal to pay 15% of their revenue from Chinese companies to the US government, but Nvidia has argued that no action has been taken to actually make good on the deal yet.

Because of this, Nvidia lacked the ability to sell its chips to China during the entire second quarter, likely resulting in a significant decline in revenue. Additionally, Nvidia reported data center revenue of $41.1 billion, growing 5% from last quarter and 56% from last year, but it barely missed analyst predictions of $41.3 billion. Experts have confirmed, though, that this small miss can be attributed to their loss of the Chinese market.

In fact, Nvidia reported that they could make around $2 to $5 billion more if H20 chip shipments to China were approved– and this figure does not include the possibility for them to sell their next-generation Blackwell chips to China, which would increase revenue even further. However, persistent geopolitical tensions are hindering their abilities, and the issues are likely to continue.

Nevertheless, despite losing one of their largest markets, Nvidia still managed to beat expectations on almost all fronts, showing the ongoing strength in the AI market and proving that the industry is expected to keep growing in the coming years. The company also forecasted revenue in the third quarter to be at least $54 billion.

Still not convinced? Check out this article on the rise of Nvidia, AI, and how the technology is impacting markets across the world from our member-exclusive Business collection, The Profit Playbook.

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