NVIDIA's Q2 earnings report exceeded expectations, so why did the stock price drop by 5%? NVIDIA faces these three major challenges.

NVIDIA’s Q2 revenue exceeded expectations, but the stock price fell after hours due to obstacles in the Chinese market and conservative financial forecasting. (Background: QCP Capital: NVIDIA’s financial report is out tonight, and the movement of US stocks may influence Bitcoin trends) (Additional background: All declines are paper tigers; will the aggressive alt season brought by interest rate cuts appear in Q4?) NVIDIA (NVIDIA) reported its Q2 2025 financial results after hours on the 27th, delivering a revenue of $46.7 billion and a slight beat of $26.4 billion over market expectations, with the data center segment contributing the most, generating $41.1 billion, accounting for a high 88%, and Blackwell chip shipments increasing by 17% quarter-over-quarter. However, NVIDIA’s after-hours stock price fell by as much as 5%. Why did the impressive numbers not translate into stock price applause? Zero shipments to China: Chinese revenue plummets One possible reason for the selling pressure after hours is that the company confirmed zero sales of H20 chips to China in Q2. The H20 chip’s previous design complied with US export regulations, but after the government tightened export controls in April, it effectively blocked the H20. China used to account for about 15% to 20% of NVIDIA’s revenue, but now it has dropped to only $2.8 billion in Q2, accounting for just 5.9%. Faced with an order vacuum, Jen-Hsun Huang had previously stated after meeting with President Trump that the H20 was expected to receive government approval for shipment to China. However, it was recently reported that officials in China instructed domestic companies to avoid using H20 chips, adding further doubts about H20 chip sales. Conservative financial forecasting: Investors worry about growth hitting the brakes Another possible reason is that NVIDIA’s Q3 financial report performance is only 1% above market consensus, and investors are concerned that if the progress of US-China negotiations continues to drag on, the sales gap may not be filled in a short time, making it difficult to stimulate investors to increase their positions. Inventory is also an issue. The financial report shows that NVIDIA’s Q2 inventory skyrocketed to $14.96 billion, a 30% year-over-year increase. Although the official explanation is to prepare for the mass shipment of Blackwell in Q3, the market is worried that this may be related to declining demand for the old series H100 and H200, coupled with other tech giants accelerating self-developed AI chips, increasing pressure on NVIDIA. Response strategy: New chips and $60 billion buyback To mitigate the impact, NVIDIA stated that it is developing the new B30A chip based on the latest export standards and is in communication with the US Department of Commerce to restart some business operations in China. Jen-Hsun Huang estimates that the value of the AI market in China is about $50 billion, growing at 50% annually, which cannot be ignored. In terms of capital allocation, the board also approved an additional $60 billion stock buyback plan and announced a cash dividend of $0.01 per share to be distributed on October 2, releasing confidence to shareholders. In summary, NVIDIA’s financial report proves that demand momentum remains strong, but the stock price reaction indicates that investors are now focusing on geopolitical issues. In the coming quarters, the direction of US-China tech policy will determine whether NVIDIA can regain its market share in China and will test the effectiveness of the company’s strategy to buy time with new chips and buyback plans. Related reports: The Swiss Central Bank Chairman again refuses to “include Bitcoin in reserves”! The stability of the Swiss franc is paramount, but the constitutional amendment is still under petition. Venture capital guru Tim Draper returns to vigorously promote Bitcoin: Don’t be afraid, we are still in the BTC major trend. Trend analysis: Can Ethereum ETH lead Bitcoin in this cycle? SharpLink is very optimistic. <Why did NVIDIA’s Q2 financial report exceed expectations but the stock price drop by 5%? NVIDIA faces these three major challenges> This article was first published in BlockTempo, the most influential Blockchain news media.