NVIDIA Stock Drops 3% as China Absence, High Expectations Weigh on Results

NVIDIA's latest financial report has been met with a mixed response from the market. While the company's performance was stable and met expectations, the market's high expectations could put pressure on its stock price in the short term. The company's second-quarter revenue was 467 billion, with a year-on-year growth rate of over two years at its lowest, but still above analyst expectations. The company's guidance for the third quarter's revenue midpoint was 540 billion, which was in line with market expectations but was seen as "lukewarm" and lacking in highlights.

Following the release of the financial report, NVIDIA's stock price fell by more than 3% in after-hours trading. The market has largely absorbed the growth potential brought by NVIDIA's new Blackwell architecture chips, and the second-quarter results and guidance were solid but fell short of the high expectations, which could lead to a decline in the stock price.

NVIDIA's revenue and profit growth for the previous fiscal quarter exceeded market expectations, driven by strong demand for its AI chips. However, the absence of sales from the China market became a notable concern. The financial report showed that NVIDIA maintained double-digit total revenue growth for the quarter ending July 31. Despite this, the company's guidance for the current quarter was not as robust as investors had hoped, which could weigh on the stock price.

The market's high expectations for NVIDIA's performance are partly due to the company's leadership in the AI chip market. However, the absence of sales from the China market, which is a significant contributor to the global semiconductor industry, could limit NVIDIA's growth potential. This is particularly relevant given the ongoing trade tensions between the United States and China, which could further impact NVIDIA's ability to access the China market.

Investors are also concerned about the potential impact of the US-China trade war on NVIDIA's supply chain. The company relies on suppliers in China for a significant portion of its components, and any disruption to the supply chain could impact its ability to meet demand. Additionally, the US government's restrictions on exports to China could limit NVIDIA's ability to sell its products in the region, further impacting its growth potential.

In summary, while NVIDIA's financial performance was stable and met expectations, the market's high expectations and the absence of sales from the China market could put pressure on its stock price in the short term. Investors will be closely watching the company's performance in the coming quarters to see if it can meet the high expectations and overcome the challenges posed by the US-China trade war.