Nvidia’s latest results may look like another victory lap, but behind the glowing headlines lies a fracture that investors can no longer ignore. While demand in the U.S. and other key markets continues to surge, the company’s China business has fallen to levels that sharply contradict the narrative of unstoppable growth. One of Nvidia’s most important regions has effectively stalled, and the implications for long-term momentum are far more serious than the top-line numbers suggest.
The company generated only about $2.8 billion in China this quarter — roughly 5% of revenue and miles below expectations. Even worse, sales of the newly tailored H20 chips barely moved the needle. Export rules, geopolitical pressure and the rise of domestic champions like Huawei have created a structural headwind that won’t ease anytime soon. Nvidia now faces a future where the world’s second-largest economy is no longer a catalyst, but a strategic risk.
Why is the Chinese market so strategic for Nvidia?
- One of the world's largest data centre markets. China is building AI infrastructure at a pace unparalleled globally, and demand for accelerators has long been among the fastest growing in the world.
- Strong concentration of hyperscalers. Companies such as Tencent, Baidu and Alibaba are giant buyers with regular orders that used to be able to fill entire quarters of Nvidia's production.
- Historically high revenue share. In the last fiscal year, China accounted for about 13% of Nvidia's total revenue, and analysts have long counted on growth rather than decline.
- Rapid adoption of generative AI. Chinese tech firms are investing massively in proprietary LLM models, cloud services and automation, which has made China a key player for Nvidia's expansion.
- Competition has long been weak. Until last year, China didn't have a domestic alternative that came close to the Hopper architecture in performance, making Nvidia virtually unthreatening in the region.
- A market worth tens of billions. CEO Jensen Huang has repeatedly stated that he sees the Chinese AI market as an opportunity of up to $50 billion.
- Ecosystem Multiplier. Chip sales in China have often included downstream revenue from software, licensing and system solutions - high-margin segments.
Nvidia $NVDA thus stands between two forces pulling in opposite directions. On the one hand, demand for AI chips continues to grow in the U.S., the Middle East and Asia outside of China - from the United Arab Emirates to South Korea. The push for "sovereign AI" infrastructure is driving new orders forward, and the US has even approved the sale of up to 35,000 advanced GB300 servers to the Emirates, confirming the global strength of Nvidia's technology platform. But on the other hand, the company is missing out on a market that its CEO Jensen Huang has long identified as a $50 billion opportunity - and at a time when Chinese rivals are investing unprecedented sums in their own accelerators and cloud architectures.
While the overall results look monumental, the coming months for Nvidia will be marked by geopolitical negotiations, regulatory risk, and a fight for a place in a market it once dominated. The company is trying to convince the US and Chinese governments that its chips should be part of the global infrastructure, but the pressure of the trade war is now stronger than individual interests. If it is to succeed in restoring growth in China, it will require much more than export licences - it will be a struggle for technological position, strategic partnerships and perhaps even a redefinition of the entire expansion strategy.
Financial results and outlook
- Adjusted earnings per share were USD 1.30, above expectations USD 1.25.
- Revenues were USD 57.0 billion, compared to the expected USD 54.9 billion.
- Net income increased year-over-year by 65 % at USD 31.9 billion.
- Nvidia expects sales in the next quarter to be around USD 65 billionwhile the market was expecting USD 61.7 billion.
Datacenter business (key segment)
- Datacenter revenues were USD 51.2 billion, above expectations. USD 49.1 billion.
- Year-over-year data center growth was 66 %.
- Of which USD 43 billion .
- Networking earned USD 8.2 billion.
- Growth is driven mainly by new chips GB300 and the family of Blackwell Ultra (the best-selling).
AI boom and demand
- There continues to be extremely strong demand for cloud GPUs - according to the CEO "they are sold out".
- Hyperscalers (Microsoft, Amazon, Google, Meta, Oracle) are massively ramping up investment, collectively this year over USD 380 billion.
- Nvidia has orders for 500 billion USD for 2025-2026.
Nvidia continues to grow, but for the first time in a long time, it faces the question of whether its story will remain global or begin to break along geopolitical lines. And that may be more important to investors than another record quarter.