Nvidia has set new sales records as demand for artificial intelligence keeps accelerating, though global tensions cloud the company’s outlook.
On Wednesday, the chipmaker revealed $46.7bn (£34.6bn) in second-quarter revenue, a 56% leap compared with the same period last year.
Yet its shares slipped in after-hours trading after executives admitted the company was still “working through geopolitical issues”. Nvidia remains in the middle of a heated trade conflict between the United States and China.
Rapid policy shifts under the Trump administration, aimed at keeping America ahead in artificial intelligence, add further challenges to its business.
Tech giants pour money into AI
Nvidia’s processors have become the backbone of the artificial intelligence revolution.
The company said demand remains especially strong from global leaders such as Meta, owner of Instagram, and OpenAI, the creator of ChatGPT. Both firms are racing to expand their AI capacity at scale.
“The AI race is now on,” said Nvidia boss Jensen Huang in a call with analysts. He explained that four major technology companies had doubled yearly investment to $600bn.
“Artificial intelligence will accelerate GDP growth over time,” Huang added. “We are providing the infrastructure to drive it.”
Analysts say Nvidia has no serious rivals in the AI chip market. Colleen McHugh, chief investment officer at Wealthify, called the company “the engine of the AI surge”.
She said Nvidia depends on ongoing spending from tech giants. If that continues, she added, revenue and shares will keep climbing.
Revenue from data centres jumped 56% to $41.1bn, though results came in slightly below forecasts. Investor Eileen Burbridge, founding partner of Passion Capital, said this caused the “share price wobble”.
Still, she praised Nvidia’s growth as “unbelievable” but warned of a possible bubble if enthusiasm grows too quickly.
In July, Nvidia became the first company worldwide valued at $4trn. The firm now forecasts $54bn in revenue for the current quarter, ahead of Wall Street estimates.
Global politics cloud the future
Despite record-breaking sales, Nvidia faces growing risks from geopolitical disputes.
In July, the company announced it would restart sales of its high-end AI chips to China. The move followed lobbying from Huang, who convinced the Trump administration to reverse its ban on the H20 chip, designed for Chinese customers.
The restriction had been introduced over concerns that the technology could boost China’s military and its local AI sector.
Executives confirmed that by late July, US officials had begun reviewing licenses for H20 sales. Some Chinese clients received approvals, but Nvidia has not shipped the chips.
The US government expects to collect 15% of revenue from licensed H20 sales. Nvidia left the H20 out of its forecast and is pressing for approval to sell its new Blackwell chips in China, the largest chip market in the world.
Meanwhile, Beijing is pushing to strengthen its own semiconductor industry. “US export restrictions are fuelling Chinese chipmaking,” said Emarketer analyst Jacob Bourne.
He added that Nvidia’s long-term status as “the bellwether of the AI economy” may hinge on whether its expansion into robotics secures its leadership.
