Nvidia earnings preview: AI darling faces slower growth, sky-high expectations

Two years into the generative AI boom, Nvidia (NVDA) reports fiscal Q2 results Wednesday with Wall Street watching closely.

The Setup

• Stock performance: +33% YTD; up 12x since ChatGPT’s debut (late 2022). Market cap recently topped $4T.

• Street consensus (LSEG): Revenue +53% YoY to $45.9B; EPS sharply higher.

• Last quarter: Growth slowed to +69% after five straight quarters of triple-digit gains.

• Q3 guide: Analysts expect +50% YoY to $52.7B. A “beat and raise” could re-ignite AI momentum.

Business Mix

• Data center: 88% of Q1 sales, driven by hyperscaler demand.

• Customer concentration: 34% of FY24 sales tied to three big names (likely Microsoft, Google, Amazon, Meta).

• Capex backdrop: Megacaps plan ~$320B AI/data center spend in 2025; about half of AI capex flows to Nvidia, per analysts.

Product Cycle

• Blackwell GPUs: Core driver of forward growth. Hit $27B sales in May (70% of data center revenue), up from $11B prior quarter.

• Blackwell Ultra: Ships 2H25. Rubin (2027 roadmap) facing early production rumors, which Nvidia has denied.

• Supply, not demand, is the bottleneck.

Macro & Geopolitics

• China sales: H20 chip (~$8B potential) currently blocked by U.S. licensing rules; Trump announced Nvidia will pay a 15% levy on China AI chip sales to regain access.

• Analysts expect no H20 contribution in guidance, citing Beijing’s pressure to use Huawei/local chips.

• KeyBanc says including H20 could lift revs by $2–3B, but likely excluded.

Market Implications

• Nvidia = AI trade. At ~7.5% of the S&P 500, its results shape broader risk sentiment.

• Valuation sensitivity: Any sign of slowing hyperscaler demand or weaker Blackwell ramp could spark volatility.

• Upside risk: Strong Blackwell adoption + surprise China guidance boost.

• Downside risk: Conservative outlook, supply delays, or cautious commentary on hyperscaler spending.

Key watch items Wednesday:

1. Q2 revenue/EPS vs. consensus.

2. Q3 revenue guidance — does it top $52.7B?

3. Blackwell ramp commentary (supply chain, customer adoption).

4. China chip update (H20 or new Blackwell-based product).

5. Jensen Huang’s tone on AI capex sustainability.