Nvidia continues to surge as worldwide demand for artificial intelligence grows, even as international disputes threaten its progress.
On Wednesday, the chip designer reported revenue of $46.7bn (£34.6bn) for the second quarter, up 56% compared with the same period last year.
Despite the strong earnings, shares dipped in after-hours trading after executives admitted the company was still “working through geopolitical issues”. Nvidia remains caught in the escalating trade conflict between Washington and Beijing.
Shifting US policies under the Trump administration, designed to protect America’s lead in artificial intelligence, add more pressure on the firm’s outlook.
Chip demand fuels rapid expansion
Nvidia’s processors are central to the booming artificial intelligence market.
The company confirmed strong demand from major technology groups, including Meta, the owner of Instagram, and OpenAI, the creator of ChatGPT. Both are investing heavily to expand AI capacity.
“The AI race is now on,” said Nvidia boss Jensen Huang during a call with analysts. He said four leading technology firms had doubled yearly spending to $600bn.
“Artificial intelligence will accelerate GDP growth over time,” Huang added. “We are building the infrastructure that powers this growth.”
Industry experts also see Nvidia as unmatched. Colleen McHugh, chief investment officer at Wealthify, called the firm “the leader of the AI boom”.
She noted Nvidia’s heavy reliance on spending by tech giants. Continued investment, she explained, would keep revenue and shares moving higher.
Revenue from data centres jumped 56% to $41.1bn, though slightly below analysts’ estimates. Investor Eileen Burbridge, founding partner of Passion Capital, said this weaker result caused the “share price wobble”.
Even so, she praised the company’s progress as “unbelievable” but warned that too much excitement could create a bubble.
In July, Nvidia became the world’s first company to reach a $4trn valuation. The firm now expects revenue of $54bn for the current quarter, above Wall Street forecasts.
Politics threaten future growth
Despite record-breaking results, Nvidia faces rising risks from geopolitics.
In July, the company announced plans to restart sales of its high-end AI chips to China. The decision followed lobbying from Huang, who persuaded the Trump administration to reverse its ban on the H20 chip, designed for Chinese customers.
The ban had been introduced amid concerns that the chips could benefit China’s military and domestic AI developers.
Executives said that by late July, US authorities had started reviewing licenses for H20 sales. Some Chinese firms received approvals, but Nvidia has not shipped any chips.
The US government expects to collect 15% of revenue from licensed H20 sales. Nvidia left the H20 out of its forecast and is lobbying for approval to sell its Blackwell chips in China, the largest chip market worldwide.
At the same time, Beijing is accelerating efforts to build its domestic semiconductor sector. “US export restrictions are fuelling Chinese chipmaking,” said Emarketer analyst Jacob Bourne.
He added that Nvidia’s long-term status as “the bellwether of the AI economy” may depend on whether its move into robotics secures its future leadership.
