Nvidia's Q2 Earnings Disappoint, Triggering Post-Earnings Dip

Nvidia's Q2 results fell short of expectations, leading to its third straight weekly drop. Analysts have revisited their forecasts, and the company's stock is in focus amid the post-earnings dip.

NVIDIA Corp. (NVDA) reported its second-quarter fiscal 2026 earnings on July 2, 2025, with adjusted earnings per share (EPS) of $1.05, surpassing the Zacks Consensus Estimate of $1.00 but falling short of expectations. Revenues came in at $46.74 billion, outpacing the Zacks Consensus Estimate of $46.14 billion [1]. Despite strong year-over-year growth, the stock price of NVDA fell 3.2% in after-market trading, primarily due to underwhelming Data Center segment revenues.

China Sales Evaporate
The Data Center segment revenues, which are crucial to NVDA's crown, came in at $41.1 billion, below the consensus estimate of $41.3 billion. This segment's revenues were $26.2 billion in the prior-year quarter, and the sequential decline of 1% was solely due to the absence of H20 chip sales in China. The Trump administration restricted the shipment of H20 chips to China in April, but the situation changed in July when the U.S. Government assured NVIDIA that licenses would be granted soon. However, the U.S. Government has since asked NVIDIA to pay a 15% levy on its total sales in China, which could face legal challenges due to the U.S. Constitution's ban on export taxes [1].

Q3 Guidance
NVIDIA's management expects quarterly sales to reach $54 billion, +/- 2%, in the third quarter, with the Zacks Consensus Estimate currently at $52.22 billion. The company believes that the resumption of H20 sales in China could add another $2 to $5 billion in the third quarter. The Zacks Consensus Estimate for EPS is currently pegged at $1.17, up 44.4% year over year [1].

Market Impact
NVIDIA's earnings report will be closely watched to gauge AI spending growth, while the Fed's dovish tilt and a potential rate cut in September are increasing market risk. The company's strong track record of beating consensus earnings suggests a positive outcome, but the share reaction remains uncertain given high expectations. The upcoming earnings report will be closely watched, with options markets pricing in 7–10% post-earnings volatility [2].

References:
[1] https://finance.yahoo.com/news/buy-nvidia-solid-q2-2026-124200752.html
[2] https://www.ainvest.com/news/nvidia-earnings-impact-crypto-market-risk-stock-decline-fed-dovishness-concerns-2508/