Nvidia’s stock sank as much as 5% after the bell on Wednesday as giant chipmaker’s middling financial outlook raised fears about a slowdown in the red-hot artificial intelligence sector.
The Santa Clara, Calif.-based company led by CEO Jensen Huang said it expects revenue of $54 billion in its current quarter — short of high-end estimates of more than $60 billion. Meanwhile, the company kept mum on the outlook for its China business, which has become an increasing source of anxiety as trade tensions with the US mount.
In a call with skittish analysts late Wednesday, Huang insisted that Nvidia was still scrambling to meet demand for its powerful AI chips worldwide.
“The buzz is everything’s sold out,” Huang said, referring to the company’s current chips on the market. “The opportunity ahead is immense, a new industrial revolution has started.”
Earlier Wednesday, however, Nvidia said its H20 chip — a less powerful version aimed at China specifically designed to comply with US expert controls — had no sales to China in the latest quarter. The revenue forecast “has not assumed any H20 shipments to China,” Nvidia added.
Investors sold on the news, with Nvidia shares recently off 2.7% at $176.74. Nvidia had closed Wednesday trading as the world’s most valuable company, with a market cap of approximately $4.43 trillion.
Nvidia said revenue grew 56% in the quarter to $46.74 billion, while net income jumped 59% to $25.78 billion or $1.05 per share. Those figures were both better than expected, according to analysts polled by LSEG.
Revenue from Nvidia’s AI data centers, its key sales driver, jumped 56% to $41.1 billion.
The company’s blockbuster growth has been fueled by massive demand for its chips and data centers as Big Tech giants like OpenAI and Meta compete to win the artificial intelligence race.
Earlier this year, the Trump administration barred Nvidia from selling H20 chips to China due to security concerns. Earlier this month, the White House reversed course and allowed Nvidia to resume H20 sales in exchange for a 15% cut of its chip revenue in China.
However, reports soon surfaced that Beijing was irritated over “insulting” remarks by Commerce Secretary Howard Lutnick, who said the US doesn’t “sell them our best stuff, not our second-best stuff, not even our third-best,” and had told Chinese tech firms to seek other options.
Earlier this week, The Information reported that Nvidia had halted H20 chip production in response to Beijing’s crackdown. Chinese officials have reportedly cited security risks as the reason for their warning about Nvidia hardware.
