Is There a Shadow Over "AI is NVIDIA": The Story Behind a 56% Revenue Increase — NVIDIA's Earnings and Stock Price Discrepancy

What NVIDIA has demonstrated is the strength of a company holding the "standard of AI infrastructure." For the second quarter of fiscal year 2026 (up to July 27, 2025), revenue was $46.7 billion, a 56% increase compared to the same period last year. Even compared to the previous quarter, it grew by 6%, indicating continued extraordinary growth. Core data center revenue reached $41.1 billion (also +56%), setting a new record. The company provided third-quarter guidance of $54 billion (±2%) and increased its share buyback program by $60 billion. Despite this, the stock price fell by 2-3% in after-hours trading. NVIDIA NewsroomInvestopedia

Key Points (Main Topics)

• Revenue: $46.7 billion (YoY +56%)

• Data Center: $41.1 billion (record high, slightly below market expectations)

• Outlook for July-September: Revenue $54 billion (±2%)

• H20 Sales to China: Zero this quarter as well

• $650 million of H20 inventory sold outside the region, $180 million inventory write-back (EPS effect of about $0.01)

• Share Buyback Program: Additional $60 billion approved
  These factors sent mixed signals to investors, resulting in a "sell the news" reaction in the stock price. NVIDIA NewsroomInvestopedia

2) "Blackwell" is on track—but the market has "excessive expectations"

CEO Jensen Huang emphasized, "The mass production of Blackwell Ultra is in full swing, and demand is very strong." Indeed, data center sales related to Blackwell increased by 17% from the previous quarter, indicating a smooth launch of the next-generation architecture. However, due to the stock price surge in anticipation of large CapEx increases by big tech, the market was sensitive to even "slight misses" or "normal operational guidance." NVIDIA NewsroomInvestopedia

3) The "Blank Zone" of China: Continued Zero and 15% Contribution Condition

A symbolic aspect of this earnings report is the continuation of "zero sales to China." Due to U.S. export restrictions, shipments of H20 to China have stopped, and $650 million worth of inventory was sold outside China. A $180 million inventory write-back gain was realized. Furthermore, it has been reported that resuming sales to China requires an unusual condition of "contributing 15% of sales to the U.S. government," but actual resumption has not progressed due to the "avoidance mood" of Chinese authorities. The company assumes zero sales to China this quarter as well. NVIDIA NewsroomFAZ.NET

The geopolitical tug-of-war continues. The U.S. is strengthening export restrictions to maintain its technological edge, while China is intensifying its push for domestic production and limiting U.S. components. As a result, NVIDIA faces a dual challenge: losing sales opportunities in the short term while potentially inviting the rise of Chinese competitors (= increased global competition) in the medium to long term. Reuters

4) What Did Investors Dislike?

The numbers are strong. Yet, the stock price fell. There are mainly three reasons.

1. Slight Miss in Data Center: Segment revenue was record-breaking but fell short of the market's overly high expectations. Investopedia

2. "Common Sense" Level of Guidance: $54 billion slightly exceeded expectations but wasn't enough to be called a "surprise." Investopedia

3. Geopolitical Uncertainty: Continued zero sales to China, political conditions for resuming shipments, and other factors cloud the outlook. FAZ.NET

These three factors combined likely led to a classic "sell the news" scenario, where "the numbers are great, but the news is already priced in."

5) Sentiment on Social Media: Bullish vs. Cautious

Investment communities like Reddit

• Bullish Camp: "Beat on both top and bottom lines. Blackwell's launch exceeded expectations, and the long-term outlook remains strong." Posts sharing key facts from the press release (revenue +56%, DC +56%, H20 sales outside the region, etc.) gained traction right after the earnings announcement. Reddit

• Cautious Camp: "Short-term correction due to reaction to excessive expectations," "RSI overheating → classic 'sell the news'"—these technical and supply-demand perspectives were prominent even before the announcement. Reddit

Market Commentary and Analysis

In live broadcasts and breaking news coverage, the dominant narrative was "expectations were exceeded, but guidance and slight miss in DC led to a stock price drop." YouTubeInvestopedia

Summary: The community sentiment is "long-term bullish, short-term cautious." There is a balance between those who believe in the tailwinds of Blackwell and AI investment and those who are wary of correcting excessive expectations (profit-taking).

6) How Long Will "AI = NVIDIA" Last?—A Structural Perspective

A Reuters editorial points out, "NVIDIA is synonymous with AI for now, but not forever." As U.S.-China tensions lead to sales restrictions and Chinese companies (like Huawei) push for self-sufficiency, and as major cloud companies ramp up their own chips, the monopoly may start to erode. While NVIDIA leads in technology, ecosystem, and supply capacity, how it navigates the "two frictions" of political risk and customer self-manufacturing will be key in the next chapter. Reuters

7) KPIs Investors Should Watch Next

• Blackwell's Mix Ratio: The speed of generational transition (contribution to DC growth rate). NVIDIA Newsroom

• CapEx Progress of Major Customers: The execution amounts by companies like Alphabet and Meta directly impact NVIDIA's backlog. Investopedia

• China's Status: Licensing of H20/B series, feasibility of the 15% contribution clause, and timing of sales resumption. FAZ.NET

• Capital Allocation: The pace of consuming the $60 billion share buyback program and measures against dilution. Investopedia

8) Conclusion: The Numbers Are Sufficient, the Sentiment Is Delicate

The fact that a "monster" figure of +56% in revenue was achieved even with zero sales to China is significant. However, the bar of expectations was even higher. The long-term trend of AI investment, political risks, the rise of competition, and the saturation of expectations—this tug-of-war will shape the future "AI market." What investors can do is to calmly follow both the numbers and the sentiment. NVIDIA NewsroomInvestopediaFAZ.NET

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