NVIDIA's revenue outlook beats expectations but China risks weigh on stock ｜ Semiconductor & AI Market Outlook.
US chip giant NVIDIA announced on August 27 that its third-quarter revenue forecast is $54 billion (±2%), surpassing market expectations of $53.14 billion. The strong guidance is backed by robust demand for generative AI infrastructure and large-scale investments from cloud providers. However, growing regulatory uncertainty around the Chinese market weighed on investor sentiment, sending the stock down 3.2% in after-hours trading, erasing about $110 billion in market capitalization.
| Item | Actual/Guidance | Market Expectation |
|---|---|---|
| Q3 Revenue Guidance | $54B (±2%) | $53.14B |
| Q2 Revenue (Actual) | $46.74B | $46.06B |
| Data Center Revenue (Q2) | $41B | $41.42B |
| Adj. Gross Margin (Q3 Guidance) | 73.5% | 73.3% |
| Stock Reaction (After Hours) | -3.2% | — |
NVIDIA emphasized that demand for semiconductors, especially GPUs used in AI training and inference, remains strong. Q2 revenue of $46.74B beat estimates, with over half coming from major cloud customers. The company is also focusing on its “Sovereign AI” strategy — providing AI chips and software to governments — with expected revenue of $20B in 2025.
The latest forecast excludes revenue from AI chip “H20” sales to China. The US government is considering imposing export restrictions and a 15% fee on such sales. These export controls and geopolitical risks remain major uncertainties. Analysts noted that “the biggest bottleneck for NVIDIA is not silicon, but diplomacy.”
Ben Bajarin, CEO of tech consultancy Creative Strategies, commented: “China is not factored into this forecast. If sales recover next quarter, there is upside potential.” Meanwhile, the CIO of Running Point Capital remarked: “NVIDIA’s growth curve is still remarkable, but not exponential,” signaling a more cautious outlook.
NVIDIA also approved an additional $60B share buyback, reinforcing its commitment to shareholder returns. However, with investors already accustomed to stellar results, the positive guidance failed to spark a stock rally, as high expectations were already priced in.
NVIDIA remains at the center of the global AI market, with extremely strong demand. Yet policy risks and geopolitical tensions could cap valuation in the near term. For investors, the stock may face short-term volatility, but long-term growth opportunities in AI infrastructure remain intact.
This article is edited and written based on publicly available information and does not constitute investment advice. The accuracy of the content or future outcomes is not guaranteed, and all investment decisions should be made at your own responsibility.
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