In the aftermath of announcing earnings, as explained in this article, What can we expect from Nvidia’s Q2 earnings results on Wednesday, 27 August, Nvidia shares fell by around 2 to 4 percent in after-hours trading despite beating both revenue and earnings per share expectations for the second quarter of fiscal 2026. According to Daniel Ives, the after-income drop can be attributed to slightly disappointing data-center revenue results, conservative guidance for Q3, and profit-taking after an extended rally. He provides further comments regarding the company’s reaction to the price drop and its outlook.
Positive earnings reports but disappointing in one segmentation
Nvidia’s adjusted EPS came in at $1.05, four cents above the consensus, and total revenue amounted to $46.74 billion, exceeding expectations of $46.13 billion. However, data-center revenues, which represent most of Nvidia’s revenue source and give it credibility in AI-based infrastructural works, were reported at $41.1 billion, falling slightly short of the StreetAccount estimate of $41.34 billion. This result, missing the mark for the second straight quarter, created some caution among investors despite the overall beat.
Guidance reflects growth deceleration
For Q3, Nvidia gave guidance of around $54 billion, above the Street’s estimate of $53.1 billion and below the most bullish expectations. The management indicated that the guidance excluded potential shipments of the H20 chips to China, which could increase revenue by $2-$5 billion if geopolitical constraints ease. Even though this represents an excellent year-on-year growth of 56%, it is also the slowest growth rate since mid-2023, raising fears that perhaps Nvidia is moderating its breakneck pace.
Profit-taking and high valuation pressures
Nvidia has come under pressure after having actually abandoned the valuation parameter: With the market capitalization above $4.3 trillion until this point, any sign of deceleration will invite short-term profit-taking. Still, analysts maintain that anything short of excellence may not suffice under projected perfection when it comes to Nvidia.
Uncertainty of sales to China
A crucial factor affecting the reaction to earnings is uncertainty surrounding exports of the H20 chip to China. While the U.S. government has granted licenses, Chinese authorities have been advising domestic consumers not to purchase these high-end AI chips. Thus, during the second quarter of this year, Nvidia reported no sales of the H20 to China, resulting in a year-on-year drop of $4 billion in data-center compute revenue. The future quarters are likely to be significantly impacted by the resolution of this standoff.
Daniel Ives’ view
Daniel Ives, known as the tech bull, cites this pullback as a buying opportunity and reiterates his bullish view on Nvidia’s long-term course. In comments to Bloomberg, Ives was clear: China remains a multi-billion-dollar growth leverage: “When you look at $2–$5 billion from China and the acceleration in the next few quarters, there’s no reason earnings aren’t accelerating.” He believes that Nvidia will have a market capitalization of $5 trillion by early 2026, which represents a 15% upside to the share price.
Context in the market
Nvidia’s results are the litmus tests for the AI-driven bull market. Its Q2 performance and guidance set the tone for tech peers and major index movements. Following the report, the S&P 500 outperformed into record territory, but mixed semiconductor stock reactions highlighted the sector’s sensitive nature to China policy and growth normalization.
Nvidia’s Q2 beat highlights underlying strengths, but a minor miss in data-center revenues, a slowdown in growth cadence, and geopolitical uncertainties in China contributed toward a near-term decline. Ives sees the drop as a good opportunity to get in, citing strong long-term demand for AI solutions and an open market in China. Although profit-taking and valuation worries may linger, Nvidia commands technological leadership and an ever-growing addressable market, and thus, on balance, the outlook remains bright.
