Nvidia beats on top and bottom lines as company expects breakneck AI spend to continue

Authors: Kif Leswing

Publisher:

CNBC

Published: 8/28/2025

Language:English

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Aura Windfall

Good morning norristong_x, I'm Aura Windfall, and this is Goose Pod, just for you. Today is Sunday, August 31st. We have a truly fascinating topic to explore, one that touches the very core of our technological future.

Mask

And I'm Mask. We're here to dissect Nvidia's latest triumph. They've beaten expectations on top and bottom lines, signaling that the absolute gold rush in AI spending is not just continuing, it's accelerating. Let's get into it.

Aura Windfall

Let's get started. The numbers themselves are almost hard to comprehend. For their second quarter, Nvidia reported revenue of $46.7 billion. That's a 56% increase from just one year ago. What does a number like that even feel like? It speaks to a current of change running through our world.

Mask

It feels like victory. It feels like inevitability. This isn't just about selling chips; it's about owning the foundation of the future. The demand for their Blackwell AI platform is voracious. The data center revenue alone was $41.1 billion. This is the engine of the AI revolution.

Aura Windfall

And yet, there's a fascinating tension here, especially concerning China. CEO Jensen Huang mentioned a "real possibility" of bringing their new Blackwell chips to the Chinese market. It feels like walking a tightrope, balancing immense opportunity with complex global dynamics. What is the truth of that situation?

Mask

The truth is that China is a $50 billion opportunity this year alone, growing 50% annually. You don't walk away from that. You find a way. The deal with the Trump administration for the H20 chip, sharing 15% of the revenue, is a pragmatic, if controversial, solution to a massive problem.

Aura Windfall

It’s a powerful choice, certainly. But it also seems that China is pushing back, with reports of authorities discouraging the use of that very H20 chip in government projects. It’s like a dance of strategy and national pride. What I know for sure is that trust is the hardest currency to earn.

Mask

Of course, they're pushing back. They're building their own champions. But demand is demand. While the politicians posture, the tech giants there, the Alibabas and Tencents, need the best tools to compete. We paused H20 purchases for a review, but that only creates pent-up demand.

Aura Windfall

And in the middle of all this, there are whispers of a new chip, the B30A, specifically for the Chinese market. It’s incredible, this constant innovation in the face of obstacles. It’s a testament to the human spirit's drive to create, to connect, and to move forward, no matter the barrier.

Mask

It's not about spirit; it's about strategy. If one product is restricted, you design another that fits the rules. The B30A will be a monster, half the power of the top-tier Blackwell Ultra, but more than enough to dominate that specific market segment. It's relentless adaptation. That's how you win.

Aura Windfall

This incredible success didn't just appear overnight. There's a deep story here, a journey of growth and transformation. Could you walk us through how Nvidia became this titan of the data center? It feels like a lesson in vision and purpose.

Mask

It's a story of seeing the future before anyone else and having the guts to build it. A decade ago, their quarterly revenue was barely a billion dollars. They started with high-performance computing in the late 2000s, then machine learning caught fire. They didn't follow the trend; they created it.

Aura Windfall

So it was about recognizing a new possibility for their technology? Moving beyond gaming and seeing a new world of potential in data and computation. That's a powerful "aha moment" for any organization, realizing your creation has a destiny you never initially imagined.

Mask

Exactly. While others saw GPUs for graphics, they saw them as parallel processors for massive computation. The generative AI boom starting in mid-2023 was just pouring gasoline on a fire they had been building for fifteen years. Their net income is now over 56% of revenue. Unheard of.

Aura Windfall

But that journey had its challenges. I read about the U.S. chip restrictions leading to a $4.5 billion write-off for the H20 chips they couldn't sell to China. A moment like that must test the spirit. How does a company navigate such a significant setback?

Mask

You absorb it and pivot. A $4.5 billion write-off is painful, but it's a calculated cost of doing business on the global stage. Look at what happened next. Data center compute sales dipped slightly, but networking revenue almost doubled to over $7 billion. They turned a problem into a new area of dominance.

Aura Windfall

What I know for sure is that true strength is revealed not when things are easy, but when they are hard. That pivot to networking is a beautiful example. It’s not just about the chips anymore, but about how everything connects. The whole system.

Mask

It's the entire platform. The InfiniBand and Spectrum Ethernet interconnects are critical. You can have the fastest car, but if the roads are slow, you go nowhere. They are building the entire superhighway. That's why Huang can confidently predict a record-breaking year, and the next one too.

Aura Windfall

And he sees this incredible growth, this 50% phase, continuing until 2030. That level of sustained energy is breathtaking. But are there others entering this space? Does this kind of success invite competition? It must, right? It's a natural part of the ecosystem.

Mask

Competition is a constant. Huawei is pushing their Ascend GPUs, AMD is making moves, and the big cloud players are trying to build their own custom chips. But they are all years behind. Nvidia isn't just selling hardware; they're selling an entire, deeply integrated software and networking ecosystem.

Aura Windfall

That brings us to this projected global buildout of AI factories, a $3 to $4 trillion endeavor. It's a number so large it feels abstract, but it represents a fundamental shift in our world's infrastructure. It’s like the building of the railroads or the electrical grid. A new foundation for our collective future.

Mask

And for every $50 billion spent on one of these AI factories, Nvidia gets $35 billion of it. It’s an astounding position. They are not just participating in the new industrial revolution; they are the primary architects and equipment suppliers. The opportunity ahead is immense. The AI race is on.

Aura Windfall

This brings us to the heart of the conflict. It's not just about technology; it's about policy, politics, and fundamentally different visions for the future. There seems to be a real debate in Washington about how to handle this incredible power, especially regarding China.

Mask

It's a clash of strategies. The initial Biden administration rules were restrictive. Then the Trump administration reversed the ban on the H20 chip. The logic, as stated by their adviser, was that if you don't sell to them, they're forced to innovate and build their own. It’s a calculated gamble.

Aura Windfall

That’s such a fascinating perspective. The idea that competition, even when it’s fostered in a rival, ultimately pushes your own innovation forward. It’s a high-stakes theory. But it creates so much uncertainty. One moment sales are banned, the next they are approved. How can anyone plan for the future?

Mask

You plan for volatility. You build adaptable systems. The whiplash is part of the game. Now, the Department of Commerce is stepping in again, requiring licenses for the H20, citing concerns about their use in supercomputers. This just cost Nvidia a potential $5.5 billion this quarter. It's a constant battle.

Aura Windfall

And then we have former President Trump's very direct involvement, defending the deal that gives the U.S. government 15% of the revenue from these China sales. It’s so rare to see that level of direct corporate negotiation from a political leader. It blurs the lines, doesn't it?

Mask

He sees it as a tollbooth on the road to China. He even called the H20 chip "obsolete" and said he wanted 20%. It's a disruptive, transactional approach to geopolitics. While unconventional, it forces a clear, monetary value on the transaction, which is a language everyone understands.

Aura Windfall

What I know for sure is that amidst all this high-level maneuvering, the people on the ground are the ones who have to make it work. The engineers, the developers, both in the U.S. and in China. Chinese AI firms are now forming alliances, trying to build their own domestic ecosystem.

Mask

It's the inevitable reaction. U.S. curbs are a catalyst for China's self-sufficiency. They are stockpiling what they can and pouring resources into domestic alternatives. It creates a fragmented world, but it also creates new, hungrier competitors, which ultimately accelerates the pace of innovation for everyone. It's a crucible.

Aura Windfall

So, with all this conflict and uncertainty, what is the real-world impact on Nvidia right now? How does a company weather such a storm of geopolitical shifts and still project such incredible confidence and growth for the future? It’s a lesson in resilience.

Mask

The impact is that they've made themselves bulletproof to it. Their guidance for the next quarter is around $54 billion. That already accounts for an $8 billion hit from the China export controls. They've strategically positioned themselves so that China is now upside, not a dependency. It's brilliant.

Aura Windfall

That is a profound shift in thinking. To reframe a massive market from a necessary component of your business to a potential bonus. It speaks to a deep confidence in their core growth elsewhere. Where is that confidence coming from? It must be more than just the chips themselves.

Mask

It comes from their transformation into a full-stack infrastructure platform. The Mellanox acquisition was the key. Networking revenue is surging, up 98% year-over-year. They're not just selling processors; they're selling the entire nervous system for the data center. It's a deep, strategic moat.

Aura Windfall

A "nervous system." I love that imagery. It’s so true. The value isn't just in the brain, but in how quickly and efficiently the brain can communicate with the entire body. It's about creating a holistic, integrated system where the whole is so much greater than the sum of its parts.

Mask

And that system provides tangible results. They improve AI cluster efficiency from a mediocre 65% to an elite 85-90%. In a power-constrained world, that efficiency isn't a feature; it's the entire economic model. It's the difference between a viable AI business and a money pit. Competitors can't replicate that.

Aura Windfall

So, Nvidia has become the benchmark, the bellwether for the entire AI industry. Their performance isn't just a reflection of their own health, but the vitality of this whole new technological era. That's an immense responsibility, to be the standard-bearer for a revolution.

Aura Windfall

Looking ahead, the numbers being discussed are just staggering. Jensen Huang forecasts up to $4 trillion in AI infrastructure spending by 2030, and that's explicitly *excluding* China. What does a future with that level of investment even look like? It feels both exciting and a little overwhelming.

Mask

It looks like the next industrial revolution, but faster. It's a Cambrian explosion of intelligence built on a silicon foundation. That $4 trillion is the capital expenditure to build the AI factories that will reshape every industry on the planet. It's the biggest infrastructure project in human history.

Aura Windfall

At the same time, we have this parallel story unfolding. The China AI market is projected to become a nearly $50 billion opportunity on its own. Nvidia's own CFO, Colette Kress, warned that losing access would have a "material adverse impact." It feels like we're watching two different futures diverge.

Mask

We are. The world is bifurcating. There will be a Western AI ecosystem and a Chinese sovereign AI ecosystem, engineered for different purposes. One is for productivity and enterprise, the other for control and surveillance. Losing the China market hurts, but it also simplifies the mission: dominate the rest of the world.

Aura Windfall

What I know for sure is that Nvidia's journey is a powerful story of vision, adaptation, and the relentless pursuit of building the future. It’s a reminder that great change is driven by technology, but guided by human choices. That's the end of today's discussion.

Mask

The key takeaway is that the AI revolution is real, it's accelerating, and Nvidia is at the absolute center of it. Thank you for listening to Goose Pod. See you tomorrow.

Here's a comprehensive summary of the provided news about Nvidia's Q2 2026 earnings report: ## Nvidia Beats Expectations Amidst Continued AI Infrastructure Demand **News Title:** Nvidia beats on top and bottom lines as company expects breakneck AI spend to continue **Report Provider:** CNBC **Author:** Kif Leswing **Date/Time Period Covered:** Q2 2026 (reported Wednesday, July 23, 2025) **Relevant News Identifiers:** Nvidia (NVDA) earnings report Q2 2026 ### Key Findings and Conclusions: Nvidia reported stronger-than-expected earnings and revenue for its second quarter of fiscal year 2026. The company signaled continued robust demand for artificial intelligence (AI) infrastructure, projecting sales growth to remain above 50% in the current quarter. This indicates that the AI boom, which began showing significant impact on Nvidia's results in mid-2023, shows no signs of abating. ### Key Statistics and Metrics: * **Earnings Per Share (Adjusted):** $1.05 (vs. $1.01 estimated) * **Revenue:** $46.74 billion (vs. $46.06 billion estimated) * **Projected Revenue for Current Quarter:** $54 billion, with a 2% margin of error. This projection *does not* include any shipments of the H20 chip to China. Analysts had expected $53.1 billion. * **Overall Company Revenue Growth (Year-over-Year):** 56% (from $30.04 billion in the prior year's quarter). This marks the ninth consecutive quarter of over 50% year-over-year revenue growth. * **Data Center Revenue Growth (Year-over-Year):** 56% (to $41.1 billion). This figure fell slightly short of the StreetAccount estimate of $41.34 billion. * **Data Center "Compute" Revenue (GPU Chips):** $33.8 billion. This segment saw a 1% decline from the first quarter due to $4.0 billion less in H20 sales. * **Data Center Networking Parts Revenue:** $7.3 billion, nearly double the amount from the prior year. * **Net Income:** Increased 59% to $26.42 billion, or $1.05 per share, compared to $16.6 billion, or 67 cents per share, in the year-ago period. * **Blackwell Sales Growth (Quarter-over-Quarter):** 17%. Blackwell sales accounted for approximately 70% of data center revenue in May, reaching $27 billion. * **Gaming Division Sales:** $4.3 billion, up 49% year-over-year. * **Robotics Division Sales:** $586 million, representing 69% annual growth. * **Share Repurchases:** The board approved an additional $60 billion in share repurchases with no expiration date. The company repurchased $9.7 billion in stock during the quarter. ### Significant Trends or Changes: * **Continued AI Infrastructure Buildout:** Nvidia's data center business remains the primary driver of its growth, fueled by the global AI buildout. * **Slowing Growth in Data Center Revenue:** While still strong, the data center revenue growth of 56% was the slowest period of growth during the company's nine-quarter streak of over 50% growth. * **Impact of H20 Chip Restrictions:** Nvidia sold no H20 chips to China during the quarter. The company previously stated that the H20 chip, custom-built for China, resulted in $4.5 billion in writedowns and could have added $8 billion in second-quarter sales. However, Nvidia did benefit from releasing $180 million worth of H20 inventory to a customer outside of China. * **Potential for Future China Shipments:** Following a meeting between CEO Jensen Huang and President Donald Trump, Nvidia signaled it expects to receive U.S. licenses to ship the H20 chip to China. The company stated it could ship between $2 billion and $5 billion in H20 revenue during the quarter if the geopolitical environment permits. * **Customer Spending:** Nvidia's major customers, including Meta, Alphabet, Microsoft, and Amazon, are collectively spending tens of billions of dollars quarterly on infrastructure to develop AI models and services. These large cloud providers constitute about half of Nvidia's data center business and are currently purchasing the latest generation Blackwell chips. * **Gaming Division's Shifting Role:** The gaming division, once Nvidia's largest, has been surpassed by data center sales due to the AI boom. Nvidia is now tuning its gaming GPUs to run certain OpenAI models on personal computers. ### Notable Risks or Concerns: * **Data Center Revenue Shortfall:** Data center revenue missed estimates for the second consecutive period, contributing to a dip in the stock price in extended trading. * **Geopolitical Environment:** The ability to ship H20 revenue to China is contingent on the geopolitical environment. ### Material Financial Data: * **Total Revenue:** $46.74 billion * **Net Income:** $26.42 billion * **Data Center Revenue:** $41.1 billion * **Projected Revenue for Next Quarter:** $54 billion +/- 2% * **AI Infrastructure Spending Projection:** Nvidia's finance chief, Colette Kress, expects between $3 trillion and $4 trillion in AI infrastructure spending by the end of the decade. ### Important Recommendations: The report does not contain explicit recommendations. However, the continued strong performance and positive outlook suggest confidence in Nvidia's AI strategy and market position. ### Contextual Interpretation: Nvidia's Q2 2026 earnings report confirms its dominant position in the AI hardware market. Despite a slight miss in data center revenue expectations, the company's overall financial results and forward-looking guidance underscore the immense and ongoing demand for AI infrastructure. The projected sales growth of over 50% signals that the "AI race" is still in its early stages, with major tech companies heavily investing in AI capabilities. The stock's performance, up 35% year-to-date after nearly tripling in 2024, highlights investor confidence. However, the slight dip in extended trading due to the data center revenue miss indicates that Wall Street is closely scrutinizing every aspect of Nvidia's performance. The company's ability to navigate geopolitical complexities, particularly regarding shipments to China, will be a key factor to watch. The substantial projected AI infrastructure spending by the end of the decade provides a strong tailwind for Nvidia's future growth. The company's commitment to returning value to shareholders through significant share repurchases further reinforces its financial strength.

Read original at CNBC →

Nvidia CEO Jensen Huang attends the "Winning the AI Race" Summit in Washington D.C., U.S., July 23, 2025. Kent Nishimura | ReutersNvidia reported better-than-expected earnings and revenue on Wednesday, and said sales growth this quarter will remain above 50%, signaling to Wall Street that demand for artificial intelligence infrastructure shows no sign of fading.

The stock, which is up 35% this year after almost tripling in 2024, slipped in extended trading as data center revenue came up short of estimates for the second straight period. Shares pared the losses Thursday.Here's how the company did, compared with estimates from analysts polled by LSEG:Earnings per share: $1.

05 adjusted vs. $1.01 estimatedRevenue: $46.74 billion vs. $46.06 billion estimatedNvidia said it expects revenue this quarter to be $54 billion, plus or minus 2%, though that number does not assume any H20 shipments to China. Analysts were expecting revenue of $53.1 billion, according to LSEG.The company's 2026 second quarter results confirmed that Nvidia's data center business remains entrenched in the global AI buildout.

Nvidia finance chief Colette Kress told analysts on an earnings call that the company expects between $3 and $4 trillion in AI infrastructure spending by the end of the decade.Overall company revenue rose 56% in the quarter from $30.04 billion a year ago, Nvidia said. Year-over-year revenue has now exceeded 50% for nine straight quarters, dating back to mid-2023, when the generative AI boom started to show up in Nvidia's results.

However, the second quarter marked Nvidia's slowest period of growth during that stretch.During the quarter, after CEO Jensen Huang's meeting with President Donald Trump, Nvidia signaled that it expected to get U.S. licenses to ship the H20 chip to China. The processor, which was custom built for sales to China, cost Nvidia $4.

5 billion in writedowns and could have added $8 billion in second-quarter sales if it had been commercially available during the period, the company previously said.Nvidia said it sold no H20 chips to China during the quarter, bu benefited from the release of $180 million worth of H20 inventory to a customer outside of China.

Kress said that Nvidia could ship between $2 billion and $5 billion in H20 revenue during the quarter if the geopolitical environment permits.Net income increased 59% to $26.42 billion, or $1.05 per share, from $16.6 billion, or 67 cents per share, in the year-ago period. Nvidia's growth is driven by its data center business, centered around graphics processors, or GPUs, and complementary products for connecting and using them in large quantities.

Revenue in the division rose 56% from the year-ago period to $41.1 billion, which was short of a StreetAccount estimate of $41.34 billion in the quarter.Kress said in a statement that $33.8 billion of Nvidia's data center sales were for "compute," or Nvidia's GPU chips, which declined 1% from the first quarter because of $4.

0 billion less in H20 sales. Kress said $7.3 billion of data center sales were from networking parts needed to build Nvidia's more complicated systems, which was nearly double the amount from the year-ago period.Read more CNBC tech newsTesla sales plunge 40% in Europe as Chinese EV rival BYD's tripleNvidia CEO Huang says bringing Blackwell AI chip to China 'is a real possibility'Microsoft fires two employees over breaking into its president's officeGoogle has eliminated 35% of managers overseeing small teams in past year, exec saysLarge cloud providers make up about half of Nvidia's data center business, the company said in the previous quarter.

Those customers are currently buying Blackwell chips, the company's latest generation.Nvidia said that Blackwell sales rose 17% from the first quarter. In May, Nvidia said its new product line reached $27 billion in sales, accounting for about 70% of data center revenue.Nvidia's earnings report comes a few weeks after the company's biggest customers, including Meta, Alphabet, Microsoft and Amazon, announced results.

All four of those companies are spending tens of billions of dollars a quarter in infrastructure buildouts as they race to develop AI models and services used by consumers and businesses.Nvidia's gaming division reported $4.3 billion in sales, up 49% from the year-ago period. The division used to be Nvidia's largest before the AI boom supercharged data center sales.

Nvidia said during the quarter that its GPUs intended for gaming would be tuned to run certain OpenAI models on personal computers.The company's robotics division, which management has highlighted as a growth opportunity, remains a small part of Nvidia's business, with $586 million in sales during the quarter, representing 69% growth on an annual basis.

Nvidia said that its board has approved an additional $60 billion in share repurchases, with no expiration date. Nvidia repurchased $9.7 billion in its stock during the quarter.WATCH: What's next for Nvidia in China

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