Nvidia has posted record revenue as artificial intelligence demand surges, while political friction challenges its growth prospects.
On Wednesday, the Santa Clara-based chipmaker reported $46.7bn (£34.6bn) in second-quarter revenue, a 56% increase from the same period in 2024.
Despite the strong results, shares fell in after-hours trading after executives acknowledged the company was still “working through geopolitical issues.” Nvidia remains at the center of the trade conflict between Washington and Beijing.
Policy shifts under the Trump administration, designed to maintain US dominance in artificial intelligence, add further uncertainty for the company.
Tech giants fuel AI growth
Nvidia’s advanced chips are essential to the global AI expansion.
The company highlighted strong demand from major technology players such as Meta, owner of Instagram, and OpenAI, creator of ChatGPT. Both are rapidly scaling their AI operations.
“The AI race is now on,” said Nvidia chief Jensen Huang in a call with analysts. He revealed that four large technology firms had doubled their annual spending to $600bn.
“Artificial intelligence will accelerate GDP growth over time,” Huang added. “We provide the infrastructure powering that growth.”
Analysts note Nvidia’s dominant position in the AI chip market. Colleen McHugh, chief investment officer at Wealthify, called the company “the driving force behind the AI boom.”
She warned that Nvidia relies heavily on continued spending from tech giants. If that investment continues, revenue and share prices should keep rising.
Data centre revenue climbed 56% to $41.1bn but slightly missed analyst expectations. Investor Eileen Burbridge, founding partner of Passion Capital, said this weaker performance triggered the “share price wobble.”
Even so, she described Nvidia’s growth as “unbelievable” while cautioning that excessive excitement could create a bubble.
In July, Nvidia became the world’s first $4trn company. The firm now expects $54bn in revenue for the current quarter, surpassing Wall Street forecasts.
Geopolitical tensions weigh on growth
Despite record results, Nvidia faces mounting political challenges.
In July, the company announced plans to resume 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, developed for Chinese buyers.
The ban had been imposed over concerns that the chips could benefit China’s military and domestic AI developers.
Executives confirmed that by late July, US officials began reviewing licenses for H20 sales. Some Chinese clients received approvals, but Nvidia has not shipped the chips.
The US government expects to claim 15% of revenue from licensed H20 sales. Nvidia excluded the H20 from its forecast and continues lobbying for approval to sell its new Blackwell chips in China, the world’s largest chip market.
Meanwhile, Beijing is stepping up efforts to strengthen its semiconductor industry. “US export restrictions are fuelling Chinese chipmaking,” said Emarketer analyst Jacob Bourne.
He added that Nvidia’s long-term role as “the bellwether of the AI economy” may depend on whether its expansion into robotics secures lasting dominance.
